Accredited Buyer`s Representative Designation Core Course

Transcription

Accredited Buyer’s Representative
Designation Core Course
A Program by the Real Estate Buyer’s Agent Council
Student Manual
Student Manual
V 2.1
© Copyright 2013, Real Estate Buyer’s Agent Council (REBAC)
V 2.1
Note: The National Association of REALTORS® and the Real Estate Buyer’s Agent Council, its
faculty, agents, and employees are not engaged in rendering legal, accounting, financial, tax, or
other professional services through these course materials. If legal advice or other expert
assistance is required, the student should seek competent professional advice.
Real Estate Buyer’s Agent Council
430 North Michigan Avenue
Chicago, Illinois 60611
800-648-6224 (phone)
312-329-8632 (fax)
[email protected]
[email protected]
Contents
Introduction .......................................................................................................................... 1
Welcome ................................................................................................................................................... 2
Achieving the ABR® Designation Requirements ........................................................................................ 3
ABR® Elective Courses ............................................................................................................................... 5
15 Business Tools for REBAC Members .................................................................................................... 6
Course Learning Goals............................................................................................................................... 9
6 Skill Groups—Learning Objectives ......................................................................................................... 9
Exam ........................................................................................................................................................ 10
1. Winning the Buyer as a Client .......................................................................................... 11
The Buyer’s Advocate ............................................................................................................................. 12
The Evolution of Buyer Representation .................................................................................................. 14
What Buyers Want .................................................................................................................................. 15
How Buyers Start Searching for Homes .................................................................................................. 16
Can the Internet Replace You? ............................................................................................................... 19
Ride the Confidence Wave ...................................................................................................................... 21
The Winning Edge—Your Value Proposition .......................................................................................... 21
Will You Be Buyers-Only? ........................................................................................................................ 22
2. Forming a Buyer Relationship .......................................................................................... 25
First Meetings ......................................................................................................................................... 26
Staying Safe ............................................................................................................................................. 28
The Buyer Consultation Session .............................................................................................................. 30
Goals of a Buyer Consultation Session .................................................................................................... 31
How Is an Agency Relationship Formed? ................................................................................................ 33
Is a Written Buyer Representation Agreement Necessary? ................................................................... 34
Are You a Secret Buyer’s Agent? ............................................................................................................. 35
How Will We Work Together? ................................................................................................................ 36
What Are the Options? ........................................................................................................................... 36
What Are Your Duties and Responsibilities?........................................................................................... 41
Duties to Clients—Real World ................................................................................................................ 43
Realtors Property Resource® ................................................................................................................... 47
Responsibilities to Customers ................................................................................................................. 50
Are You in Sync with Your Broker? ......................................................................................................... 53
The Ideal Home—Needs, Wants, Parameters ........................................................................................ 54
Price Parameters—Qualify the Buyer ..................................................................................................... 58
Shaping Expectations—How Is the Market? ........................................................................................... 59
Do You Want to Represent This Buyer? .................................................................................................. 63
Buyers or Renters? .................................................................................................................................. 64
The Buyer Representation Agreement ................................................................................................... 66
Four Contracts in Real Estate .................................................................................................................. 68
Compensation ......................................................................................................................................... 69
When Buyers Won’t Sign ........................................................................................................................ 75
Skill Practice—Meet Your Next Buyer ..................................................................................................... 78
3. Putting Buyer Representation Into Action ........................................................................ 81
The Search Is On—House Hunting .......................................................................................................... 82
When the Search Includes FSBOs ........................................................................................................... 83
Buyer Loyalty........................................................................................................................................... 85
Showing Property Dos and Don’ts .......................................................................................................... 87
Procuring Cause ...................................................................................................................................... 89
Fair Housing and the Buyer’s Representative ......................................................................................... 91
Skill Practice Scenarios ............................................................................................................................ 95
4. Offers, Counter Offers, and Negotiations ......................................................................... 99
Preparing the Buyer .............................................................................................................................. 100
Prepare a CMA ...................................................................................................................................... 102
Formulating an Offer............................................................................................................................. 102
Contingencies ........................................................................................................................................ 103
Negotiation “Know-How” ..................................................................................................................... 106
1. Evaluate the Buyer’s Negotiating Position ........................................................................................ 109
2. Reassess the Buyer Client’s Objectives ............................................................................................. 109
3. Develop an Offer Price ...................................................................................................................... 109
4. Plan an Offer and Negotiation Strategy ............................................................................................ 110
5. Present the Offer and Follow Through ............................................................................................. 111
Skill Practice Scenarios .......................................................................................................................... 114
Presenting an Offer ............................................................................................................................... 118
Offers on REO Properties ...................................................................................................................... 121
Offers on Short Sale Properties............................................................................................................. 122
Multiple Offer Situations....................................................................................................................... 123
Counter Offers ...................................................................................................................................... 125
You Make the Call ................................................................................................................................. 126
5. Bringing the Transaction to a Successful Close ................................................................ 129
After the Contract Is Signed .................................................................................................................. 130
Obtaining a Mortgage ........................................................................................................................... 131
Mortgage Application Follow-Up .......................................................................................................... 134
Data Security Planning .......................................................................................................................... 135
Property Insurance................................................................................................................................ 136
Title Insurance ....................................................................................................................................... 137
Final Walk-Through ............................................................................................................................... 139
What Derails Closings? .......................................................................................................................... 139
Prepare the Buyer for Closing Day ........................................................................................................ 141
6. Winning Repeat Business and Referrals.......................................................................... 145
Would Buyers Work With You Again? .................................................................................................. 146
Sharpen Your Skills ................................................................................................................................ 148
Do Your Homework ............................................................................................................................... 148
Ask for Feedback ................................................................................................................................... 152
Ask for the Business—Again ................................................................................................................. 152
6-Minute Brainstorm............................................................................................................................. 154
Your Referral Network .......................................................................................................................... 157
REBAC Supports Your Marketing .......................................................................................................... 159
Postcards and Ad Slicks ......................................................................................................................... 160
Next Steps—REBAC Candidacy ............................................................................................................. 162
Resources .......................................................................................................................... 163
Prospect ID Form................................................................................................................................... 164
Sample Agency Disclosure and Brokerage Fee Agreement for Unlisted Property ............................... 165
Buyer Needs Assessment Worksheet ................................................................................................... 166
Buyer Information and Disclosure Checklist ......................................................................................... 168
Tenant Information and Disclosure Checklist ....................................................................................... 169
True Cost of Homeownership ............................................................................................................... 170
REO Transactions: Protecting the Buyer-Client .................................................................................... 172
Make These Scripts Your Own .............................................................................................................. 173
Ask Your Broker..................................................................................................................................... 176
Acknowledgments
The success of the Accredited Buyer's Representative (ABR) designation program is driven in
large measure by the standards of educational excellence that our course providers, instructors,
and fellow buyer’s representatives uphold. REBAC expresses gratitude and appreciation to the
following ABR® Designees for their contributions, ongoing support, and commitment to
excellence in buyer representation education.
 Mary Ann Bush, ABR®, CRS, GREEN, GRI, SRES®
Portage, Michigan
 Adorna Carroll, DSA, ABR®, ABRM, CRB, GRI, SRES®, PMN
Berlin, Connecticut
 Lori Cox, ABR®, GRI, SFR, SRES®
Glenview, Illinois
 Curtis Hall, ABR®, CRS, GREEN, GRI
Chandler, Arizona
 David Kent, ABR®, ABRM
Mt. Pleasant, South Carolina
 Frank Ledermann, ABR®, CRS, GRI, e-PRO
Scarsdale, New York
 Lynn Madison, ABR®, ABRM, BPOR, GRI, SFR, SRES®
Schaumburg, Illinois
 Eloise Eriksson Martin, ABR®, SRES®, GREEN
Dallas, Texas
 Frank Mears, ABR®, ABRM, CRB, GRI, SRES®
Augusta, Georgia
 Michael Toomey, ABR®, CRS, GRI
Seattle, Washington
Introduction
1
ABR® Designation Core Course
Welcome
Welcome to the Accredited Buyer's Representative (ABR®) Designation
Core Course. This two-day course is the foundation of the ABR®
designation program. REALTORS® who earn the ABR® designation
demonstrate:
 Commitment to protecting the interests of real estate buyers
 Experience in representing buyers and helping them find the right
property for their specific needs
 Professionalism by completion of the designation program
The ABR® designation is conferred by the Real Estate Buyer’s Agent
Council (REBAC), a wholly owned subsidiary of the National Association of
REALTORS® (NAR). With more than 30,000 members, REBAC is the
world’s largest organization of professionals who specialize in
representing buyers in residential real estate transactions.
Students who complete this core course are on the way to meeting the
educational requirements for the ABR® designation.
2
Introduction
Achieving the ABR® Designation Requirements
 Membership—active membership in the National Association of REALTORS® or
cooperating international association and the Real Estate Buyer’s Agent Council (REBAC)
 Education—successful completion of the ABR® Designation Core Course plus one elective
course
 Transaction Experience—documentation of 5 completed buyer’s agent transactions
1
Be an Active NAR Member
You must be an active member of the National Association of REALTORS® or
cooperating international association. Find your NAR membership (NRDS) number
or a list of international cooperating associations at www.realtor.org.
Complete the ABR® Designation Core Course
2
You must complete the 2-day ABR® Designation Core Course and pass a 50question, closed-book exam with a grade of 80 percent or better. The course is also
offered online. Find information on course dates and locations and links to the
online course at www.training4RE.com.
Become a REBAC Member—1st year free
3
4
The ABR® Designation Core Course includes a free one-year REBAC membership
beginning when the course provider notifies REBAC of your successful course
completion. REBAC confirms your free membership by e-mail which includes your
REBAC membership ID number, a designation application, and a link to
www.REBAC.net to update your member profile and access member benefits.
Complete One Elective Course
You must complete one approved ABR® elective course within 3 years of
completing the ABR® Designation Core Course (page 5). Find an up-to-date list of
ABR® elective courses at www.REBAC.net or www.training4RE.com.
Submit a Designation Application Documenting Transactions
5
6
Complete an ABR® designation application including documentation of 5 closed
transactions in which you represented only the buyer. Valid transactions include
any closed prior to and up to 36 months after ABR® Designation Core Course
completion. Submit the application by e-mail to [email protected] or by mail
to REBAC, 430 North Michigan Avenue, Chicago, Illinois 60611, USA.
Ongoing REBAC and NAR membership
You must maintain membership in REBAC and NAR or one of its international
cooperating associations.
3
FAQs—What You Need to Know About the ABR® Designation
 When can I access the members-only side
of the REBAC website?
When the course provider (the school)
notifies REBAC of your course completion,
REBAC will e-mail you a membership
confirmation. The e-mail confirmation
contains your REBAC membership ID
number, which you will use to log on to
the members-only side of the website.
 How does REBAC know if I completed the
Designation Core Course or an elective
course?
The course provider must notify REBAC of
course completion.
 Where can I get an ABR® Designation
application?
You will receive a designation application
along with your membership
confirmation. Or go to www.REBAC.net
and login using your REBAC membership
ID number. Select ABR® applications under
My Membership.
 Where do I send the ABR® Designation
application?
Submit the completed application by email to [email protected] or by mail to
REBAC, 430 North Michigan Avenue,
Chicago, Illinois 60611, USA.
 How long does it take to process a
designation application?
Allow REBAC staff 2 business days from
receipt to process your application.
 When can I start using the ABR®
Designation logo?
When you receive notification from
REBAC that your designation application
has been approved.
4
 How do I find out if my designation
application has been approved?
You will receive a notification by e-mail
from REBAC. Depending on instructions
from your local REALTOR® association,
your ABR® Designation kit will be sent to
your preferred mailing address in the
National REALTOR® Database System
(NRDS) or your location association.
 What are REBAC’s membership dues?
1st year: free
2nd year: prorated based on ABR®
Designation Core Course completion date
3rd year: $110 annual dues
 Why am I receiving an invoice for
membership dues before the free oneyear membership expires?
REBAC membership dues are billed in
November for the upcoming year and are
due on January 1st. That means that you
will receive a dues invoice in November for
a prorated amount of dues for the second
year, less than $110, based on the month
that you completed the ABR® Designation
Core Course. For example, if you
completed the ABR® Designation Core
Course in June, you will receive an invoice
in November for $55—half a year’s dues
for the second year. The amount billed
covers the months remaining in the
calendar year after your free membership
expires and syncs your membership dues
with REBAC’s annual dues-billing cycle.
 Can I continue to use the ABR®
Designation logo if I drop my REBAC or
NAR membership?
No. You must maintain both
memberships.
Introduction
ABR® Elective Courses
20+ courses/programs to choose from and many count toward other designations and
certifications. For course dates and locations go to www.training4RE.com or www.REBAC.net
Course Title and Affiliation
 Offered online
Duration
Also Counts Toward
Designation/Certification
At Home with Diversity (REBAC) 
1 day
CIPS®, PMNsm, RSPS®
BPOs: The Agent’s Role in the Valuation Process (REBAC) 
1 day
BPOR
Buying and Selling Income Properties (CRS 204)
2 days
Effective Negotiating for Real Estate Professionals (WCR)
1 day
CRS®
PMNsm
e-PRO® Certification Program (REBAC) 
2 days
e-PRO®
Generation Buy (REBAC) 
1 day
Global Real Estate: Local Markets (CIPS) 
1 day
CIPS®
GRIsm
Graduate, REALTOR® Institute (NAR)
HAFA Short Sales (REBAC)
1 day
Harnessing the Power: Skill Based Performance
Management (WCR)
1 day
Introduction to Real Estate Auction (NAR) 
1 day
Land 101: Fundamentals of Land Brokerage (RLI) 
2 days
Military Relocation Professional Core Course (REBAC)
1 day
ALCsm
MRP
NAR’s Green Designation (REBAC) 
3 days
GREEN
New-Home Construction and Buyer Representation (REBAC)
1 day
Real Estate Marketing Reboot (REBAC) 
1 day
Realtors Property Resource® (NAR) 
½ day
REO Properties(REBAC) 
1 day
Resort and Second-Home Markets (RSPS) 
2 days
RSPS®
Seniors Real Estate Specialist (SRES®) Designation Course 
2 days
SRES®, RSPS®
Short Sales and Foreclosures: Protecting Your Client’s
Interests (CRS 111) 
1 day
CRS®, SFR®
Short Sales and Foreclosures: What Real Estate Professionals
Need to Know (REBAC) 
1 day
SFR®
Successful Buyer Representation in New-Home Sales
(REBAC) 
1 day
Successful Buyer Representation in Relocation (REBAC) 
1 day
PMNsm
5
15 Business Tools for REBAC Members
1. Home Buyer’s Toolkit—a 10-step quick-reference guide
2. Consumer handouts for your buyer presentation kits—free, printable
handouts on topics to address in a buyer-consultation session or while
working with buyer-clients
3. Postcards—customizable through the REBAC Print Shop
4. Ad Slicks—numerous themes coordinate with postcards
5. ABR® Brochures—showcasing the benefits of using a buyer's
representative
6. Mailing Services—further simplify your Print Shop orders
7. Online Membership Directory—linking home buyers to buyer’s
representatives
Access all of these
tools and benefits at
www.REBAC.net.
Sign in with your
REBAC Membership ID
number.
8. Logos—downloadable ABR® logo
9. Press Releases—written for you to customize and distribute
10. Enhanced Profiles for all REBAC members in the online membership
directory
11. Guide to Conducting Home Buyer's Seminars—a comprehensive
online tool
12. Buyer Counseling Session Template—key questions and topics
13. Structuring Buyer’s Agreements template—common provisions in a
representation agreement
14. REBAC Connection Webinars—special experts cover timely topics
15. Education and networking opportunities at the annual REALTORS®
Conference & Expo
6
Introduction
7
3 More Benefits Exclusively for ABR® Designees
 ABR® Facebook Business Splash Page
Install this ABR® tab on your Facebook business or group page. Tell
the world about your ABR® designation and the value you offer to
home buyers.
 ABR® App for Your iPhone
The ABR® App lets you access home buyer resources, finance
calculators, marketing tips, and articles from Today's Buyer's Rep.
ABR® Designees can download the App for free at the iTunes App
store. Search on ABR App. Compatible with iPhone, iPad, and iPod
Touch.
 ABR® Network Online Community
Start building your buyer representation network with this interactive
online community exclusively for ABR® designees. The site features
forums, groups, and blogs to share expert advice and best practices,
referral directory, and much more.
8
Introduction
Course Learning Goals
The goal of the 2-day ABR® Designation Core Course is to establish a
foundation of training, skills, and resources to help you succeed as a
buyer’s representative. Let’s look at what you can expect to learn over
the next two days.
 Build a buyer representation business
 Value the services you perform on behalf of buyer-clients
 Increase confidence to work toward a signed buyer representation
agreement if written buyer representation agreements are
customary in your market
 Gain methods, tools, and techniques to provide the support and
services that buyers want
6 Skill Groups—Learning Objectives
The course material is organized into six modules based on the skills and
knowledge you need to fulfill your value proposition as a buyer’s
representative. The learning objectives of the skill-group modules are:
 Skill Group 1: Winning the Buyer as a Client

Gain the confidence to present the case for buyer
representation

Articulate a value proposition as a buyer’s representative
 Skill Group 2: Forming a Buyer Relationship

Connect different relationships (client or customer) and forms
of representation to duties and services provided

Conduct an interview and consultation session that leads to a
signed buyer representation agreement and wins buyers’
loyalty

Help buyers evaluate if they are ready to purchase homes

Help buyers establish their needs, wants, and price range
 Skill Group 3: Putting Buyer Representation into Action

Search for properties that meet the buyer’s needs and wants

Follow federal, state, and local Fair Housing laws when
selecting and showing properties
9

Work with listing agents to arrange property showings

Prepare a buyer for property showings

Show properties

Apply safety procedures when showing property

Maintain confidentiality of client information
 Skill Group 4: Offers, Counter Offers, and Negotiations

Assess the strengths and weaknesses of offers and negotiation
positions of the buyer and seller

Help the buyer formulate an offer

Use valuation tools—RPR, AVMs, CMAs—to help the buyer
evaluate price/value

Present your buyer-client’s offer to the seller

Help the buyer formulate and implement a negotiation
strategy

Guide buyers through the offer and counter offer process

Cope with a multiple-offer situation
 Skill Group 5: Bringing the Transaction to a Successful Close

Guide buyers through the required actions and processes
between contract and closing
 Skill Group 6: Winning Repeat Business and Referrals

Create and strengthen your brand

Take advantage of NAR and REBAC business tools

Implement strategies for maintaining contact with clients and
customers as a source of future business
Exam
The course concludes with a 50-question multiple-choice exam.
Successful completion is 80 percent or better—a total of 40 or more
correct answers.
10
1. Winning the Buyer as a Client
11
Building a successful buyer representation business is like building a
house. You, the builder, need a vision of what your business looks like, a
business plan blueprint, and some building skills. Just like building a
house, some construction elements are required, like complying with
state laws and the REALTOR® Code of Ethics. Other design elements are
choices. Will you be an exclusive buyer’s representative? Will you use
social media in marketing? Will you focus on a niche market?
The ABR® Designation Core Course provides the skills and knowledge you
need to build your buyer representation business. The course will help
you find the winning combination for your marketplace, your business,
and your personal style.
Let’s get to work!
The Buyer’s Advocate
Buying a home is a complex process involving a major financial
commitment. For most people, it is the largest single purchase they will
make in their lifetime. Beyond the financial commitment,
homeownership is an important milestone in a buyer’s life. It is an
expression of lifestyle, as well as the place that will shape their family life
for years to come. With so much at stake, buyers want a trusted guide
who can help them make good decisions and minimize risks.
What do we owe buyers when they put their confidence and trust in us
to help them find the home of their dreams? In simplest terms, as a
buyer’s representative, the real estate agent owes the client fidelity and
fiduciary duty in all transaction matters. That duty includes finding the
right property, guiding buyers through the process, securing the best
deal, protecting their interests, and safeguarding confidential
information.
As an experienced real estate professional, you know that getting the
process right is crucial but there is a lot more to putting a transaction
together than following the letter of the law. Buyer’s representatives find
success by matching their services to buyers’ motivations, concerns, and
needs. But here is the bottom line: the reason you are in this business of
representing real estate buyer-clients and providing service, information,
knowledge, and guidance is for compensation.
12
Buyer Representation—the Flip Side of Seller’s Agent?
As we progress through the course, we will learn how buyer representation puts the
buyer on the same footing as the seller. Although representing buyers is more
involved than just the flip side of representing sellers, you can adapt the skills you
use to prospect, make listing presentations, and market properties to build a buyer
representation business.
The Seller’s Agent
The Buyer’s Agent
 Find the right buyer for the property
 Find the right property for the buyer
 Get the most money from the sale
 Get the best combination of price,
location, features, and terms
 Financial transaction
 Financial and emotional transaction
13
The Evolution of Buyer Representation
The development of buyer representation, or buyer agency, transformed
the real estate marketplace. If you started your career within the last
decade or so, you may be surprised to learn that buyer representation
was not always part of the real estate scene. The prevailing idea was that
buyer agency was not legal under state agency laws or permissible under
MLS practice and requirements. Furthermore, many brokers thought that
they could not split commissions with buyer’s representatives because
the MLS blanket offer of compensation was predicated on cooperating
agents acting as subagents of the listing broker. Listing agents
represented seller-clients but no one represented the buyers—regardless
of the emotional and financial stake in their transaction. You have
probably heard the echoes of the old ideas: “list or die, no one owns the
buyer, buyers are liars!”
Within the last 20 years, we have transitioned from representation only
for the seller to representation and client-level service, on the same
footing as the seller, for the majority of buyers. In fact, NAR’s most recent
home buyer study found that 61 percent of them were represented; of
those, 42 percent had a written buyer representation agreement and the
remainder had an oral agreement.1
Some Things Change
While buyer representation transformed real estate business models, the
Internet revolutionized the availability of information. Pre-Internet,
listing agents had a lock on information about available properties. Can
you imagine a time when home buyers were not permitted to see MLS
listing information? Although no longer in control of property
information, the buyer representation revolution benefitted listing
brokers by mostly eliminating subagency and vicarious liability from the
marketplace. The listing broker is freed from responsibility for the words
and actions of every agent who shows a property.
The Internet provides a wealth of information about properties and the
process of buying real estate and buyers are increasingly savvy. But
sometimes conflicting information inundates them. More than ever,
buyers need an expert guide with the “inside track” on the real estate
market.
1
2013 Profile of Home Buyers and Sellers, National Association of REALTORS®,
www.Realtor.org/Research.
14
Some Things Stay the Same
Despite the market transformations, real estate remains a face-to-face,
people business. Your reputation as a personable, knowledgeable,
reliable, and trustworthy real estate professional wins the loyalty of
clients and customers and their recommendations. NAR research shows
that most buyers (42 percent) found the agent they work with through
word of mouth—recommendation by a family member or friend—or
used the agent previously (12 percent). Ten percent of buyers relied on
Internet websites or search engines to find a real estate agent.2
What Buyers Want
Where do you begin building a buyer representation business? Let’s start
by looking at what buyers say they would like you to do for them and the
benefits they say you provide.
2
Ibid., page 14.
15
Do Buyers Value Your Services?3
How Buyers Start Searching for Homes
Buyers now begin the home search online. NAR research shows that on
average, buyers spend about 2 weeks looking at properties online before
contacting a real estate agent. In fact, the Internet may shorten the time
you spend helping a buyer narrow search parameters and finding the
right home. When buyers are ready to get serious about buying a home,
they seek out expert guidance to help them find the right home and
navigate the process.
3
Ibid., page 14
16
How Buyers Start the Home Search4
Visited open houses,
Contacted a lender,
3%
6%
Talked with family,
friends about the
process, 5%
* Other, 6%
Drove by homes,
neighborhoods, 7%
Looked online for
properties, 42%
Read about the
process online, 14%
Contacted a real
estate agent, 17%
* Other: newspapers, magazines, seminars, builder contact,
home seller contact, books and guides about the process
4
Ibid., page 14.
17
How Buyers Found Their Real Estate Agent5
Referred by friend, neighbor or relative
42%
Used agent previously
Referral from another agent
12%
4%
Internet website
9%
Met agent at open house
6%
For sale or open house sign
6%
Relo or employer referral
4%
Walk in or call while agent on duty
3%
Personal contact by agent
3%
Newspaper, home book, Yellow Pages
1%
5
Ibid., page 14.
18
58 percent of
buyer contacts
involve people
who know you.
% of buyers who purchased their homes through a real estate agent, 2001–2013
Can the Internet Replace You?
Do you sometimes feel like you’re competing with websites or the latest
phone app? Despite dire warnings, the Internet has not replaced real
estate agents as a valuable source of information. In fact, the trend in the
number of buyers who purchase their homes through real estate agents
has edged upward from 69 percent in 2001 to 88 percent in 2013.6
The information bombarding consumers makes your guidance and
interpretation more important than ever. Sorting out what is timely,
6
Ibid., page 14
19
valid, and valuable challenges even the savviest consumers. The Internet
has not replaced you, but you cannot discount or ignore it. As a source of
information, buyers rate its value as equal to real estate professionals.
Your Past Clients Really Like You
Need more proof that buyers see the value you bring to the transaction?
NAR research shows that your past clients were really pleased with your
services, expertise, and personal qualities. You score very high on all of
the skills and qualities that buyers say are important to them.
Furthermore, almost 9 out of 10 (89 percent) of your past buyer-clients
say that they would work with you again and—very important—
recommend you to others. They wouldn’t take the chance of
recommending you if they didn’t think you could do a good job.7
Satisfaction with Real Estate Agent Skills and Qualities
Honesty and integrity
87%
Knowledge of the process
87%
Market knowledge
86%
People skills
84%
Responsiveness
83%
Communication skills
82%
Local area knowledge
82%
Technology skills
Negotiation skills
7
Ibid., page 14.
20
77%
73%
Ride the Confidence Wave
The good news is that buyers see the benefits of working with you and
want the services you offer. Whether you have been representing buyers
for a long time or you’re just getting started, all of the data in these
charts should boost your confidence in the value of your services to
home buyers.
The Winning Edge—Your Value Proposition
Buyers understand the value of working with real estate professionals.
Your past clients are ready to recommend you to others. So, how can you
combine these advantages to make your name synonymous with real
estate? The formula is your unique value proposition and how you
express it in the marketplace.
Why are some professionals—sports stars, attorneys, hair stylists—paid
more than others? They have qualities that outshine their competitors.
Some qualities are innate like natural ability and passion, but most are
the result of experience and training. They also know how to talk to the
marketplace in a way that distinguishes them from their competitors,
whether winning a case, shaping a flattering hairstyle, or making the
game-winning play. You could call the combination of talent and ability
the winning edge. Your value proposition—your winning edge—is your
market distinction expressed as the services you offer to buyers.
Three elements form the foundation of your buyer representation value
proposition:
 Education: specialized training, like the ABR® designation, in the
business of representing real estate buyer-clients
 Expertise: knowledge of the market and process plus skills like
negotiations and communications
 Experience: what you learn day-to-day on the job
21
Will You Be Buyers-Only?
Is exclusive buyer representation in your future? Some real estate
professionals specialize in representing buyers. A buyers-only business
approach has pros and cons. For example:
Pros
 No agency conflicts means less legal risk
 No confusion over who you represent and serve
 Focused approach
 Marketing and prospecting concentrates on acquiring buyer-clients
instead of listings
Cons
 Inventory is not in your control, you must rely on listing agents
 Can only have one side of the transaction, not both
 Must refer a seller-client to another company
 Listing agents already have a relationship with a seller-client
 52 percent of all sellers use the same real estate agent for their
home purchase; up to 86 percent of sellers moving 11–20 miles8
Look back to the charts on what buyers want from agents and see as a
benefit. “The agent’s listings” doesn’t appear on either chart. Buyerclients don’t choose a buyer’s representative on the basis of the agent’s
listings.
8
Ibid., page 14
22
?
Discussion Question
Does your value proposition differ for buyers and sellers?
23
When you have met all ABR® designation requirements and REBAC confers the
designation to you, you can access these consumer one-sheets at www.rebac.net. Sign in
with the REBAC membership ID number you will receive after REBAC processes course
completion information.
24
2. Forming a Buyer Relationship
25
First Meetings
Think about your last five buyers. How did they find you? Chances are
they were referred by one of their friends or relatives or one of your past
clients. Among the ways that buyers find you,
more than half probably involve someone who
“I don’t need to meet with
knows you personally.
you first. I already know
Consider this important fact—if you are the first
real estate agent that buyers talk to, you’ll likely
be the one they decide to work with. NAR
research shows that almost 66 percent of
buyers stick with the first real estate
agent they interview.
the house I want to see,
just meet me there.”
What if your first contact is a phone
call that goes something like this?
“Our company policy
is to meet for the
first time in our
office.”
Meeting someone you don’t know
at an empty house is not a safe
action and we’ll look at safety
measures later in this course. First
meetings should take place in your
office or a busy public place, like a coffee
shop. You could say:
“Our company policy is to meet for the first time here in our office. The
house you want to see may or may not be right for you. Our first step is
to be sure we are looking at the right property for you.
You can waste time and possibly miss out on the right
home while you’re just running from house to house
and agent to agent looking at homes that may not be
what you’re looking for. Our first meeting will last
about ___ minutes and we’ll go over your needs and
price range and I’ll go over what I can do for you to
find you the right property at the right price. In the
meantime I’ll do some research on the home you are
interested in, including a check to make sure it’s still on
the market. What time works best for you? I can meet
with you now or…”
The first meeting sets the tone for your agent-client relationship. It gives
you an opportunity to engage the buyer, find out about their situation
and how far along they are in the process, and describe how you can help
26
them find the right home. How you meet buyer-prospects also impacts if
and how you will work together.
When meeting the buyer for the first time, you might consider asking the
following questions to begin the process:

How long have you been looking for a home?

How have you been doing that?

Did any agents show you property?

Are you working with another agent? What did you sign with them?
Are you in an exclusive agreement with another broker?

Did you see anything you liked?

What kept you from buying it?
REALTOR® Code of Ethics
Standard of Practice 16-9
REALTORS®, prior to entering into a representation agreement, have
an affirmative obligation to make reasonable efforts to determine
whether the prospect is subject to a current, valid exclusive
agreement to provide the same type of real estate service.
(Amended 1/04)
Agency Disclosure and Confidential Information
Early in your interactions with prospective buyers, you should make an
agency disclosure consistent with state laws. Most states require the
disclosure to provide a written explanation of all legal forms of brokerage
relationships available to consumers, even if the brokerage does not offer
all of those options.
States may have different standards for the timing of disclosure but to be
most effective the disclosure must take place before any substantive
discussions about real estate needs and financial capabilities or
exchanges of confidential information. In states that presume buyer
agency (you are automatically the agent of the person with whom you
are working), the explanation will differ from that in states where the
buyers must sign a representation agreement. Why is this discussion of
agency so important? Agents must caution prospects against sharing
confidential information.
27
 In states that require a written agreement, you could say: “At this
point, because we don’t know if I will be representing you in your
real estate transaction, please don’t give me any information you
would not want another party to know.”
 In states where agency is created at first contact: “By virtue of this
conversation, I am your agent. This means that you can speak freely
about your real estate wants and needs because I have an
obligation to keep such information confidential.”
REALTORS® Code of Ethics
When entering into buyer/tenant agreements, REALTORS® must advise potential
clients of:
1. the REALTOR®’s company policies regarding cooperation;
2. the amount of compensation to be paid by the client;
3. the potential for additional or offsetting compensation from other brokers,
from the seller or landlord, or from other parties;
4. any potential for the buyer/tenant representative to act as a disclosed dual
agent, e.g. listing broker, subagent, landlord’s agent, etc., and
5.
the possibility that sellers or sellers' representatives may not treat the
existence, terms, or conditions of offers as confidential unless confidentiality is
required by law, regulation, or by any confidentiality agreement between the
parties. (Adopted 1/93, Renumbered 1/98, Amended 1/06)
Staying Safe
Meeting prospects and showing property can place real estate
professionals in potentially dangerous circumstances. Office policies
should include safety procedures and cover risky situations that real
estate professionals encounter every day, like those described on the
next page.
Perhaps the best guide you can follow is your intuition. If a situation
doesn’t feel right or a person makes you feel uncomfortable—listen to
your gut feelings. At worst, you may be overly cautious but you could be
avoiding a very dangerous situation. For more information and resources
28
on staying safe on the job, go to NAR’s REALTOR® Safety webpage at
www.Realtor.org/topics/realtor-safety.
Staying Safe in Everyday Situations9
 Meeting a prospect for the first time
Risks: Meeting a stranger
Precautions: Meet at the office. Require completion of a Prospect
Identification Form. Ask for and photocopy ID or take a photo of the
person. Introduce the prospect to a colleague.
 Showing a property alone
Risks: Touring a vacant property with a stranger
Precautions: Walk behind the prospect. Don’t go into confined spaces
like cellars and attics. Keep groups together. Let coworkers, friends,
or family know where you are going. Use the buddy system. Schedule
a call-in time—if you don’t call in, the office knows to contact police.
Use a smart phone app to preprogram a phone call as an excuse to
leave an uncomfortable situation. Call the office and give a
predetermined distress signal. Park your car for a quick getaway.
 Open houses
Risks: Waiting in an empty house and anyone can enter
Precautions: Note in open house publicity that ID is required. Jot
down license plate numbers as lookers arrive. Introduce yourself to
neighbors. Keep groups of people together. Use the buddy system.
Schedule call-in times—if you don’t call in, the office knows to contact
police. Stow away your valuables. Open drapes and turn on all lights.
Plan an escape route. Let local law enforcement know you are holding
an open house. Park your car for a quick getaway.
 Flashy personal marketing
Risks: Inviting the attention of criminals
Precautions: Avoid provocative, glamour photos in your marketing.
Wear modest business attire and avoid flashy jewelry. Protect
personal information on websites. Don’t publish your home phone or
address or information about your family.
9
Adapted from “Real Estate’s 6 Most Dangerous Everyday Situations,” by Melissa Dittmann
Tracey, REALTOR® Magazine, September 2010, www.realtor.org
29
 Driving prospects around to look at houses
Risks: Driving strangers in your car
Precautions: Drive in separate cars. Watch where you park. Make
sure your car is not blocked so that you can make a quick getaway
without backing up. Screaming and running to a neighboring house
may be more effective—if you know someone is at home.
 Entering a vacant or foreclosed property
Risks: Encountering squatters, former owners, animals, hazardous
conditions
Precautions: Inspect the perimeter for signs of break in or occupancy.
Don’t confront squatters, occupants, or animals. Visit during daylight
hours. Use the buddy system, your partner can wait in the car and
keep in touch by mobile phone. Let coworkers, friends, or family
know where you are going.
The Buyer Consultation Session
When you meet a buyer-prospect for the first time how can you convert
the contact into a successful transaction that adds to your bottom line?
Achieving a positive outcome requires two skill sets:
 People skills to foster an interpersonal relationship
 Client-representation skills in accordance with state agency laws,
the REALTOR® Code of Ethics, and your broker’s business policies
These two skill sets come together in the buyer consultation session. The
consultation process is your opportunity to show how a buyer
representation commitment opens the door for you to fulfill your value
proposition by providing the services buyers want.
30
Goals of a Buyer Consultation Session
The interpersonal and contractual relationships come together during the buyer consultation
session. By the time buyers are willing to sit down with you for a consultation session, they
have most likely moved beyond the “just looking” stage. They are ready to take action. Your
interview strategy combines gathering and communicating information, advising on the buying
process, and laying the groundwork for a productive buyer-client relationship. Although the
real estate professional and buyer may start the session with somewhat different goals, the
bottom line is the same for both—do we want to work together?
Real Estate Professional’s Goals
 Build rapport
 Showcase your services
 Learn the buyers’ needs and wants,
financial situation
 Help the buyer form realistic expectations
 Obtain a representation commitment
 Plan a strategy for finding the right home
 Decide if you want to work together
Buyer’s Goals
 Get acquainted with the
real estate professional
 Learn what the agent can do for them
 Describe the “ideal home”
 Learn about market conditions
Obtain answers to questions and concerns
 Learn about the search and buying process
Start looking for the right home
 Decide if you want to work together
31
?
32
Discussion Question
What topics should be covered during a buyer consultation
session?
How Is an Agency Relationship Formed?
Express Agreements
An agency relationship may be in the form of an express agreement with
both parties consenting to the agreement. Although agency agreements
are usually written with the terms of the agreement spelled out, an
express agreement can be made orally or by an affirmative action. For
example:
 Written
 Buyer representation agreement
 Listing agreement
 Right-to-lease agreement
 Property management agreement
 Oral or Action
 Spoken, handshake agreement to represent a buyer
 Cooperating broker’s acceptance of a listing broker’s offer of
subagency in a sale or leasing transaction
Implied Agreements
According to the law in many states, when the licensee acts or speaks like
an agent and the consumer relies on those statements and actions, the
licensee and the consumer have formed an agency relationship. In these
states, agency relationships can result even unintentionally, accidentally,
or inadvertently regardless of the conduct of the parties, or their intent,
description, or understanding of the relationship. Key facts to remember
about implied agreements include:
 An implied agency relationship may be created without the agent’s
knowledge as a result of the agent’s actions and statements, thus
causing the duties and obligations of agency to arise without the
agent’s consent.
 The conduct of the parties can create an agency relationship even if
they have signed an acknowledgment denying the existence of such
a relationship.
 The matter of implied agency is highly state specific. Please check
your individual state licensing.
Implied agency relationships may occur when a seller’s agent works too
closely with a buyer customer and does not make the proper disclosures.
33
Is a Written Buyer Representation Agreement
Necessary?
Both buyers and real estate professionals have reasons to postpone or
sidestep discussion of signing a representation agreement. Consumers
want to keep their options open and are wary of creating a contractual
obligation, especially if they are in the “just-looking” phase. Before
initiating a contractual relationship with a buyer, real estate professionals
want to be sure the fit is right and the buyer is ready and able to
complete the transaction. In fact, it is common practice for real estate
professionals to take prospective buyers out to look at a few properties
as a way to get acquainted and decide if they will work together.
If an agency relationship can be formed by words or actions, is a written
agreement necessary? Some states require a written buyer
representation agreement. In almost all states, a broker cannot enforce a
claim for a commission against a buyer-client without a written
representation agreement. You need to know your state’s law on this
important point.
When is the best time to ask buyer to sign a representation agreement?
Brokers’ office policies range from the initial consultation to contract
signing. Agents who work with buyers as clients without a written
agreement representation agreement are still obligated to comply with
state laws and the REALTOR® Code of Ethics. Ultimately, the quality of
service that a real estate professional provides creates and sustains buyer
loyalty and productive relationships.
The ABR® Designation Core Course, however, focuses on three important
aspects of buyer representation agreements:
 how buyer representation agreements serve the consumer and the
real estate professional
 how to initiate the discussion of representation agreements with
buyers
 how to create a mutually beneficial representation agreement
Brokers and their agents, working within the REALTOR® Code of Ethics
and state law, must make business policy decisions about how the
principles presented in this course are incorporated and implemented
into day-to-day practice.
34
Are You a Secret Buyer’s Agent?
Although state specific, an implied agency relationship can occur when
the real estate professional acts or speaks like an agent and the buyer
relies on the agent’s actions and statements. Regardless of either party’s
intent, description, or understanding of the relationship, conduct can
create an agency relationship—even if the parties have signed an
acknowledgment denying the existence of such a relationship.
You might be a secret agent if you:
 Talk and act like a buyer’s representative without clarifying the
relationship
 Avoid discussing a representation agreement because you don’t
want to pressure a buyer into signing anything
 Rely on your state’s default agency position
 Assume that buyers know you’re “on their side”
 Leave the nature of the relationship vague because of discomfort
about discussing disclosures and compensation
 Delay signing a buyer representation agreement until the buyer is
ready to make an offer
Performing client-level duties without full disclosure and, preferably, a
signed agreement opens the door for a range of conflicts,
misunderstandings, lost income, and potentially serious legal
consequences. Aside from the legal ramifications, how can you expect
buyers to be loyal if you keep the client relationship under wraps? You
miss the opportunity to showcase your services as the buyer’s advocate.
What is your agency relationship at first contact?
 At open house: ___________________________________________
 Contact by phone: ________________________________________
 Internet: _______________________________________________
 In-person counseling session: _______________________________
35
How Will We Work Together?
Starting off the interpersonal relationship on the right foot eases the next
step—the contractual relationship. The nature of your first meeting, the
buyer’s previous search efforts and priorities, and information gathered
during the consultation all point to the type of relationship you’ll
establish with a buyer. Only when you are working with the buyer as a
client can you offer the full range of services that buyers want. The
services buyers value most—express an opinion about property value,
evaluate properties, help negotiate—can be offered in only an agentclient relationship.
Your representation relationship with a buyer-client and how you will
work together is determined by:
 State law: State real estate laws regulate the relationships between
agents and clients. Some states assume that a real estate
professional is the agent of the consumer with whom he is working
unless the agent specifically states otherwise. Some states allow a
non-agency transaction facilitator approach; the real estate
professional helps a buyer and seller reach an agreement, but does
not represent either party as a client.
 REALTOR® Code of Ethics: References to applicable Code of Ethics
articles and standards of practice are noted throughout the course.
 Office policy: Within the parameters of state laws, your broker’s
business policies can specify the type of agency relationships the
company offers.
What Are the Options?
Buyer or Seller Only
Although terminology for it may differ, the most straightforward type of
relationship is single agency. The agent represents only the buyer or only
the seller—or the landlord or tenant—not both. Some brokerages keep
things simple by practicing only buyer agency or only seller agency.
Dual Agency
Dual agency occurs when the agent represents concurrently both parties
in a real estate transaction, such as buyer and seller or landlord and
tenant. Depending on state laws, these situations can occur when:
36
 Buyer-clients are interested in properties listed by their broker or
agent.
 Two buyer-clients are interested in the same property. Exclusive
buyer’s agents try to avoid this situation by limiting the number of
buyer-clients that they work with at a one time.
 Two agents in the same office represent the two parties to the
transaction.
 A listing agent works too closely with a buyer who assumes the
listing agent is looking out for the buyer’s interests.
Dual agency is inherently conflictual. The duties of confidentiality,
undivided loyalty, and full disclosure cannot be reconciled between two
clients. For example, the duty to a buyer-client of confidentiality
compromises the duty to the seller of full disclosure.
Undisclosed dual agency is illegal. For example, when a listing agent’s
conduct creates the impression of working on behalf of the buyer, the
agent has created an undisclosed dual agency relationship, which is illegal
in all states.
Disclosed Dual Agency
Disclosed dual agency is workable, but only if a timely, meaningful, and
written disclosure is made and both the buyer and seller consent. Most
commonly, the brokerage company asks the buyer and seller to help the
resolve the conflict by allowing a modification of fiduciary duties, or
acknowledging the fiduciary duties required of a dual agent. In either
case, the buyer and seller must accept a reduced level of service.
An agent should not, however, try to obtain a blanket consent to
disclosed dual agency before the situation arises. When a potential dual
agency situation does occur, informed consent should be sought before
the property is shown (unless otherwise provided by law). Verbal
consent, if permissible, should be confirmed in writing when the
purchase offer is submitted.
37
Realtors® Code of Ethics
REALTORS® may represent the seller/landlord and buyer/tenant in the
same transaction only after full disclosure to and with informed consent
of both parties. (Adopted 1/93)

A disclosed dual agent can:

Provide property information to the buyer

Disclose material defects

Help the buyer compare financing alternatives

Provide information on comparable properties to help both
parties make a good decision on price
 A disclosed dual agent cannot:

Discuss motives of the buyer or seller

Disclose confidential information about either buyer or seller
without permission

Recommend or suggest a price

Disclose the lowest price the seller will accept or the highest
price the buyer will pay, or the financial position of either
without permission
Designated Agency
Designated agency (also known as appointed agency) eliminates the
dilemma of in-house dual agency situations because both the buyer and
seller continue in an agent-client relationship. In states that allow
designated agency, the broker appoints one agent to represent the buyer
and another agent to represent the seller. The broker’s appointments
specifically exclude all other agents in the office. Check your state laws,
MLS rules, and company policy to determine if subagency is still offered
in your marketplace.
38
Designated Agency: Protecting Confidential Information
When the designated agents for the
buyer and seller work in the same
office, maintaining confidentiality of
information is a major issue. Written
policies—implemented, enforced,
and observed consistently—prevent
information leaks. Company policies
and procedures, should address the
following:

Sharing information at office meetings

Office layouts—privacy when meeting with clients

Access, maintenance, and destruction of electronic and paper files

Posting information on websites, Twitter, text messages, and social
media

Notices on bulletin and sales boards

Staff training–especially those who
work on transactions for multiple
agents

Access to locked filing cabinets

Use and privacy of computer
networks, passwords, data files,
voice mail, and e-mail

Fax machine privacy—can anyone
in the office read incoming or
outgoing faxes?

Staff with whom the client may safely communicate
Subagency
Subagency was created as a way to address MLS cooperation issues, but
it has virtually disappeared from real estate practice. The subagency
concept held that when a listing was entered into an MLS, cooperating
selling brokers and their salespeople by accepting the offer in the MLS
became the subagents of the seller and agent. Because the seller paid the
commission to the listing agent, who worked for the seller, it therefore
39
followed that any agent who brought a buyer to the transaction also
worked on behalf of the seller.
Non-Agency Relationships
What about transaction facilitators? Who do they represent? In some
states, real estate agents may work concurrently with buyers and sellers
in a non-agency capacity. The real estate professional acts in a neutral
capacity to facilitate the transaction. Terminology and agent
responsibilities vary from state to state.
Non-agency relationships (where allowed by state law) include:
 Transaction broker
 Facilitator
 Intermediary
 Statutory broker
 Coordinator
There are varying viewpoints on the pros and cons of non-agency
relationships in the real estate transaction. Some argue that non-agency
relationships are the fairest way to mitigate the risk of dual agency and
protect buyers and sellers. Others assert that the motivation to limit risk
robs buyers and sellers of the opportunity for fair representation.
3 Important Principles
Depending on where you practice, state laws make certain assumptions
about what you and your colleagues as well as clients know about a
property. These assumptions, called imputed knowledge and imputed
notice, impact your responsibilities for communicating information to
clients and colleagues. Another legal principle, vicarious liability, may
hold your broker or your client legally responsible for statements and
actions made by you in regard to a property transaction.
All three of these principles are very state specific. Ask your broker or
office manager how these legal principles apply where you do business.
 Imputed knowledge
Under the theory of imputed your broker, and possibly all other
agents in your office, are deemed to have knowledge of the same
40
facts about a particular property that you have. In states where
imputed knowledge applies, office policy should provide procedures
for communicating property facts to all agents. In designated
agency situations, however, confidential information about clients
should not be shared.
 Imputed notice
United the theory of imputed notice, informing an agent is the
same as informing the agent’s client, even if the agent never
conveys the information to the client. For example, when the listing
agent communicates an offer acceptance to the buyer’s
representative, it is the same as providing notice to the buyer. As a
rule of thumb, inform your buyer-client of anything you learn about
the property or seller. Imputed notice becomes critical when
decisions depend on disclosure of material facts.
 Vicarious liability
Under the theory of vicarious liability, the client may be held
responsible for the actions or statements of agents and subagents,
even if the client was unaware of those actions or statements.
Where is still applies, agents should disclose the potential for
vicarious liability so that clients understand the risks.
What Are Your Duties and Responsibilities?
The terms client and customer or duties and responsibilities may seem
interchangeable, but there are important distinctions. Because the
relationship between client and agent is legally binding even in an
implied relationship, the agent has a duty to place the client’s interests
before those of any other parties.
An agent’s duties to the client do not mean, however, that the facts of
the transaction or the property may be concealed from or
misrepresented to a customer. Agents have a responsibility to customers
to treat them honestly.
41
Definitions—Who’s Who in a Buyer Representation World
_____________
_____________
_____________
_____________
Your Company
The licensed
person or
business entity
that agents work
for.
The Agent
The real estate
professional who
(under the
supervision of a
broker) acts for
and in the best
interests of the
client.
The Client
The party whose
interests are to be
served by the
statements and
deeds of the
agent.
All Others?
A party with
whom the agent
has no client
relationship, e.g.
the seller, an
unrepresented
buyer.
Real estate agents work for clients and with customers.
Duties to Clients
O bedience
L oyalty
D isclosure
C onfidentiality
A ccounting
R easonable care and dilligence
42
Responsibilities to Customers
H onesty
A ccounting
R easonable skill and care
D isclosure
Duties to Clients—Real World
Consider that as a buyer’s representative what you are selling is your
services—not homes—even though the outcome of your relationship is a
new home for your buyer-client. The way you go about fulfilling your
duties is your buyer representation value proposition. Let’s recap client
duties and how they relate to the REALTOR® Code of Ethics and to
communicating your value to your buyers.
Duties to Clients
Obedience: Follow all of your client’s lawful instructions. Don’t make
decisions for the client or exceed your authority.
Code of Ethics Article 1: When representing a buyer, seller, landlord,
tenant, or other client as an agent, REALTORS® pledge themselves to protect
and promote the interests of their client. This obligation to the client is
primary, but it does not relieve REALTORS® of their obligation to treat all
parties honestly. When serving a buyer, seller, landlord, tenant or other party
in a non-agency capacity, REALTORS® remain obligated to treat all parties
honestly. (Amended 1/01)
Loyalty: Give your clients your undivided loyalty. The client’s interests
come first—before customers, service providers, or anyone else
including you.
Code of Ethics Article 1 (see above)
Disclosure: Disclose affirmatively, fully, and honestly all information
concerning the transaction and property that might affect the client’s
decisions.
Code of Ethics Article 2: REALTORS® shall avoid exaggeration,
misrepresentation, or concealment of pertinent facts relating to the property
or the transaction. REALTORS® shall not, however, be obligated to discover
latent defects in the property, to advise on matters outside the scope of their
real estate license, or to disclose facts which are confidential under the scope
of agency or non-agency relationships as defined by state law. (Amended
1/00)
Confidentiality: Do not reveal confidential information learned about
clients or told to you by clients within the agency relationship.
Code of Ethics Article 1, Standard of Practice 1-9: The obligation of
REALTORS® to preserve confidential information (as defined by state law)
provided by their clients in the course of any agency relationship or non-
43
agency relationship recognized by law continues after termination of agency
relationships or any non-agency relationships recognized by law.
 Maintain confidentiality
 Don’t knowingly (during or following the termination of a client
relationship) reveal confidential information about clients.

Don’t use confidential information to the disadvantage of clients
or advantage of others including yourself.

Exceptions include: with the client’s consent after full
disclosure, compliance with a court order, prevention of a
crime, or defense against an accusation of wrongful conduct.
Accounting: Safeguard money and property held on behalf of the client.
Maintain records and provide a prompt accounting when requested of
money and property received and paid out.
Code of Ethics Article 8: REALTORS® shall keep in a special account in an
appropriate financial institution, separated from their own funds, monies
coming into their possession in trust for other persons, such as escrows, trust
funds, clients’ monies, and other like items.
Reasonable care and diligence: Protect the client from foreseeable risks
or harm. Recommend expert advice or assistance when the client’s
needs exceed the agent’s expertise.
Code of Ethics Article 1 (see above)
Code of Ethics 13: REALTORS® shall not engage in activities that constitute
the unauthorized practice of law and shall recommend that legal counsel be
obtained when the transaction warrants it.
What Is Reasonable Care and Diligence?
 Include approved protective clauses in the purchase offer
 Explain the options for contingencies and protective clauses to
include in the offer.

Advise the client on seller acceptance of or resistance to
contingencies and protective clauses based on market
conditions.

Advise the client that some protective clauses may require
attorney review.
 Prepare a comparative market analysis (CMA)
 Explain elements of the CMA to help the client make an
informed purchase offer.
44

Ask clients to initial and date CMAs you provide.
 Provide home warranty information
 Inform buyers that a home warranty is an option and explain
warranty coverage and benefits.

Inform the buyer that the warranty may be a negotiable item
and paid by the seller.
 Provide information about issues affecting value or resale
 Note aspects of the property that may impact value, such as lot
size, dimensions, square footage, and shape.
 Advise on additional charges and costs of ownership
 Verify costs and charges (in writing), such as property taxes,
impact fees, assessments, local income taxes and other cost
factors that could impact a buyer’s decision.
 Obtain a property disclosure from the seller
 Include a request for seller's disclosure as an offer condition.

Review the seller’s disclosure with the buyer.
 Have the buyer check on important issues
 Provide information on checking the sex-offender registry for
the neighborhood.

Suggest the buyer talk to the neighbors prior to making an offer
 Recommend inspections
 Present a list of types of required and optional inspections such
as environmental, radon, heating and cooling, roofing, well
water, plumbing, septic systems, and structural.

Advocate that needed repairs discovered during inspections be
corrected at seller expense.

Remind clients that they are responsible for damage to the
home done by an inspector.
 Provide lists of other professionals
 Provide list of options for a home inspector, title company,
insurance company, pest inspector, appraiser, mortgage lender,
and other services.

State that the selection of other professionals is the buyer’s
choice.

Disclose any arrangements, including financial benefits you
receive, with vendors and service providers.
45
 Provide sources of information for factors that could impact future
value and salability
 Zoning and additional restrictions: uses allowed and disallowed
in the property from zoning or homeowner association
restrictions.

Quality of title: research easements and restrictions that affect
the quality of the title. A review and approval of easements and
restrictions could be a contingency.

Schools: provide information sources for school performance
ratings; even buyers without school-age children should
consider how this data could affect resale value.

Future development: If you are aware of future construction
approved for the area, advise the client on how to research the
plans.
 Inform your client of possible negative influences
 Clients should be informed of negative aspects like nearby
landfills, toxic waste sites, manufacturing plants, sports
stadiums, and agricultural operations that may result in odors,
noise, nighttime illumination, traffic and parking problems, or
other issues.
 Inform your client of the sources of information
 Inform your client of the sources of information, especially if the
information came from the seller or seller’s representative and
was not verified. Do not rely on verbal information from the
seller or the seller’s representative.
See page 168 in the Resource section of this manual for a Buyer
Disclosure Checklist that can assist you in assuring you have made all the
required and appropriate disclosures.
?
46
Discussion Question
What sources of information do you recommend to buyers?
Realtors Property Resource®
REALTORS® can tap into a unique decision-making tool to help buyers
make informed choices and narrow the property search. Realtors
Property Resource® (RPR®) is a member benefit which means it is already
included in the dues you pay to the National Association of REALTORS®.10
What can RPR® do for you?
Does this sound familiar? You are driving around to view properties when
the buyer spots an interesting property and says something like “What
about that house? Could I see that one?” Imagine this scenario—while
you are in your car with the buyer, you use your smartphone or tablet to
search the home’s address and download the RPR® Property Report, Mini
Property Report, or Neighborhood Report, with a wealth of information
(all public) like sales11 and financing history, square footage, number of
rooms, lot size, and other facts. On-the-spot access to RPR® Property
Report data means you can present facts about the property immediately
and determine if the home might meet the buyer’s needs and wants. If
the answer is yes, you can contact the agent or seller immediately to
learn the asking price and arrange a viewing. Where sales data is publicly
reported, RPR® aggregates data on recent and current sales to calculate
an estimated value for the property; this AVM estimate can indicate if the
home is over or underpriced in comparison to similar properties in the
neighborhood.
You can view RPR® reports online as well as in downloadable PDF format.
The full-color report, with your contact information and personal or
company branding, takes only a couple of minutes to generate and
arrives in the buyer-client’s e-mail or on the client’s smart phone or
tablet. Some sample excerpts appear page 49.
The Realtors Valuation Model® (RVM®)
If your MLS shares its data with RPR®, reports include values calculated
by the RVM® from real-time, real-world data. If you’ve ever compared
price estimates from some of the online valuation sites like Zillow® or
Trulia, you know that the estimates can be quite wide—over or under
real-world property values.
10
RPR® applications and reports are available to members of the National Association of
REALTORS® practicing in the United States.
11
Except in nondisclosure states.
47
All REALTORS® have access to RPR® as a member benefit, but only those
who participate in MLSs that share data have the benefit of the RVM®. If
your MLS does not share data, value estimates are calculated by an
automated valuation model using publicly available information on past
sales. Find out if your MLS shares data, register, and take the RPR®
application for a test drive at www.narrpr.com. You’ll also find
information on continuing-education credit training classes online and in
classrooms, as well as free tutorials.
Sharing Information Responsibly
The ability to gather and share data by electronic means carries both a
legal and ethical obligation to share information responsibly. Therefore, it
is very important that you know who you are sharing information with
and why. When providing RPR® reports to clients and customers,
REALTORS® should emphasize the importance of treating the information
respectfully and making sure it doesn’t fall into the hands of someone
with bad intentions.
48
Realtors Property Resource® Property Report
49
Responsibilities to Customers
An agent’s responsibilities to customers—Honesty, Accounting, Reasonable skill and
Disclosures—can be remembered as HARD, as in it can be HARD to work with customers
because they want to be treated like clients.
Honesty: Do not make statements or take actions that can result in fraud or
misrepresentation. Ensure all laws and regulations pertaining to the transaction are
obeyed.
Code of Ethics Article 1: When representing a buyer, seller, landlord, tenant, or other client as
an agent, REALTORS® pledge themselves to protect and promote the interests of their client.
This obligation to the client is primary, but it does not relieve REALTORS® of their obligation
to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a
non-agency capacity, REALTORS® remain obligated to treat all parties honestly. (Amended
1/01)
Accounting: Record money or property received and paid out and, upon request, provide an
accounting. Safeguard money and property held on behalf of the customer.
Code of Ethics Article 8: REALTORS® shall keep in a special account in an appropriate financial
institution, separated from their own funds, monies coming into their possession in trust for
other persons, such as escrows, trust funds, clients’ monies, and other like items.
Reasonable skill: Provide standards of practice and competence that are reasonably
expected. Do not try to provide specialized professional services for a type of property or
service outside your field of competence.
Code of Ethics Article 11: The services which REALTORS® provide to their clients and
customers shall conform to the standards of practice and competence which are reasonably
expected in the specific real estate disciplines in which they engage; specifically, residential
real estate brokerage, real property management, commercial and industrial real estate
brokerage, land brokerage, real estate appraisal, real estate counseling, real estate
syndication, real estate auction, and international real estate.
Disclosure of material facts: Disclose material facts about properties. Disclose agency
relationships and explain the difference between a customer and client relationship in a
timely fashion so that customers can protect their own interests.
Code of Ethics Article 1: (see above)
Code of Ethics Article 2: REALTORS® shall avoid exaggeration, misrepresentation, or
concealment of pertinent facts relating to the property or the transaction. REALTORS® shall
not, however, be obligated to discover latent defects in the property, to advise on matters
outside the scope of their real estate license, or to disclose facts which are confidential
under the scope of agency or non-agency relationships as defined by state law. (Amended
1/00)
50
When you have met all ABR® designation requirements and REBAC confers
the designation to you, you can access these consumer one-sheets at
www.rebac.net. Sign in with the REBAC membership ID number you will
receive after REBAC processes course completion information.
51
52
Are You in Sync with Your Broker?
Most real estate professionals operate in offices that serve both buyers
and sellers. Within the framework of state laws and practices of the
marketplace, each brokerage company should have its own written policy
and procedures. And you need a complete and clear understanding of
your brokerage’s policies and procedures as well as what to do when
client relationships create conflicts. You can use office policies to your
advantage when you need a tactful way to explain some situations, such
as resolving agency conflicts.
If the approach in your brokerage office is unwritten because, “everybody
knows that,” asking the right questions may inspire development of
written policies which will benefit your colleagues too. Ask your broker or
office manager:
 What types of agency relationships do we offer and not offer?
 Do we have a statement of agency policy?
 What is the rationale for the company’s agency policy?
 What disclosures are required, when, and to whom?
 Do we have standard disclosure forms?
 Do we require exclusive buyer representation agreements?
 What is the maximum number of buyer-clients an agent can work
with at one time?
 Is dual agency okay? Under what circumstances is it not?
 Do we offer designated agency?
 How are dual or designated agency implemented?
 How should the agent interact with the client or customer in each
type of relationship?
 What procedures are in place to assure client confidentiality?
 Does the company provide training for agents and office staff?
 Has an attorney reviewed the policy for conformance with state
laws?
53
The Ideal Home—Needs, Wants, Parameters
With the myriad of property information resources online, buyers can get
a head start—or perceive that they can—on needs assessment and
property selection. Have you had the experience of buyers arriving at
your office with a list of properties they want to see? So, why not just
skip the needs assessment process and start lining up homes to view?
A needs assessment clarifies the picture of your buyer’s needs and wants,
not what you think the buyer needs and wants. Furthermore, the services
you will provide and stress as selling points for a buyer representation
agreement will be based on this information-gathering session.
By working through the process you’ll learn about the buyer’s:
 Current living situation compared to the property they want to
purchase
Ask: How does this compare with your current home? Is this a big
change in your living situation?
 Motivations
Ask: Why are you looking at this time?
 Time frame
Ask: If we find the right property, are you prepared to make a
decision now?
 Decision making
Ask: Will anyone else help you make the decision?
 Priorities
Ask: If a property meets all of your other needs but does not have (a
desired feature), should I eliminate the property or would you like
to see it?
The consumer one-sheet (next page) can help focus a buyer’s thinking
about needs and wants. Some real estate professionals use a worksheet
like the sample beginning on page 166 in the Resources section of this
manual.
54
designation to you, you can access these consumer one-sheets at www.rebac.net.
Sign in with the REBAC membership ID number you will receive after REBAC
processes course completion information.
55
56
57
Price Parameters—Qualify the Buyer
An essential phase of buyer consultation involves establishing price
parameters. Establishing a price range guides property selection and
helps the real estate agent manage the buyer’s expectations
The best course of action is to let a lender qualify buyers by means of a
mortgage pre-approval. Pre-approval not only helps establish price
parameters, it facilitates closing the transaction. Potential credit
problems that could derail the closing come to light. In fact, some real
estate professionals ask buyers to meet with lenders and obtain a
mortgage pre-approval prior to the consultation session. Other real
estate professionals use the consultation process to discuss financing and
provide a list of lenders that the buyer can contact.
If the Buyer Hasn’t Met With a Lender
What if a buyer hasn’t met with a lender, but is eager to look at a specific
house. You can use a dialogue like the following to estimate if the house
fits the buyer’s price range.
Agent: “Have you talked with a lender about financing?”
Buyer: “No. Do we have to do that now? We are really eager to look at
this house.”
Agent: “At some point you will need to talk with a lender. A pre-approval
letter will strengthen your offer and negotiation leverage. For now, just
to be sure we're in the ballpark, may I ask you a few questions?”
Buyer: “Sure.”
Agent: “Thanks. Have you thought about how much money you plan on
using as your down payment?”
Buyer: “We've got about 10 percent to put down.”
Agent: “Okay. Let's use this home’s list price of $300,000 for an example.
That would mean $30,000 down payment, leaving you with a $270,000
mortgage. You’ll need some additional funds for closing costs and other
expenses. I'll cover those later, but I just want to be sure we've got all the
bases covered.”
Buyer: “Yes, we have other funds for that.”
Agent: “Then let's calculate the payment on the $270,000 mortgage. At 6
percent interest we're looking at $6.00 per thousand per month for
principal and interest. That comes to $1,620. Taxes on the property are
$6,000 a year and insurance will be about $900, which brings us to a total
58
of $2,195 or $2,200 a month. Based on what you were planning to spend,
would that work?”
Buyer: “I think that will work and I would really like to take a look at the
house.”
Agent: “Great. Let's go take a look. When we get back, we can talk about
meeting with a lender to fine tune all of the numbers.”
Homeownership—the Big Picture
Part of the qualifying process is to ensure that your buyers are aware of
the costs of homeownership. Although the lender will provide a goodfaith estimate of the actual purchase costs, a discussion of the big-picture
costs of homeownership:
 Helps buyers make informed
decisions
 Reinforces the value of buyer
representation
 Strengthens your relationship
with your buyer-client
 Wins buyer-clients’ respect
and loyalty
For a True Cost of Homeownership
checklist, go to Page 170 in the Resources section of this manual.
Shaping Expectations—How Is the Market?
Attention-grabbing headlines can sometime create an unrealistic picture
of the market. Consequently, there may be a significant gap between the
local real estate market realities and the buyers’ perceptions. Sometimes
buyers expect to grab properties at deeply discounted, pennies-on-thedollar prices. Real estate professionals know the local market and can
align buyers’ expectations with reality. Buyers who spend weeks or
months looking at properties and delay making an offer can lose out;
59
good homes priced right generally don’t linger on the market. How do
these national statistics compare to your local market?12
 12 weeks: median number of weeks buyers who work with an agent
spend searching for a home.
 2 weeks: number of weeks buyers usually search before contacting
an agent.
 5 weeks: median time on market in 2013, 11 weeks in 2012
 49 percent: the percentage of homes that sell in less than 4 weeks
(Northeast 35%, Midwest 24%, South 36%, West 50%).
 60 percent: the percentage of homes on the market for 4 weeks or
less that sold at list price.
 95 percent: median sales price as a percentage of list price
(Northeast 94%, Midwest 95%, South 96%, West 96%).
 100 percent: median percentage of asking price received for homes
on the market 2 weeks or less.
 22 percent: percentage of homes on market for 1–2 weeks or less
that received more than the asking price.
12
Source: 2013 Profile of Home Buyers and Sellers, National Association of REALTORS®,
www.realtor.org
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The A-A-I Buyer Consultation Session
Use the “A-A-I” Model to ask for information, answer questions, and inform on the process.
Ask:
Answer:
Inform:
 Buyer’s motivations?
 How will we communicate?
 Currently renters or
owners?
 How you will help find the
right property?
 Caution not to share
confidential information
before agreeing to work
together
 Home to sell before buying?  Sources you use to find
properties?
 Interview other buyer
representatives?
 Working with other agents?
 Search efforts to date?
 Length of search so far?
 How will you identify “new
on the market” properties?
 Will you help me find out
about a property’s
condition?
 Market conditions and
realities
 Realistic expectations for
property search
 Advantages of buyer
representation
 How you are compensated?
 Agency disclosure
 Properties seen and liked?
 Do you represent the
sellers?
 Your credentials, experience,
specialties, and services
 What kept you from
buying?
 What if I find a home on my
own?
 Your performance guarantee,
if offered
 Property needs, wants,
locations, price
parameters?
 Time frame, critical dates?
 How can I be sure you’ll get
me the best deal if your
commission depends on the
price of the property?
 Down payment and
financing plans?
 What are the steps in the
purchase process?
 Budget for mortgage
payments?
 Will you help me compare
prices?
 Potential financing issues,
credit problems?
 Market conditions—buyers’
or sellers’ market?
 Mortgage pre-approval?
 Can you provide a list of
lenders, repair contractors,
other services?
 Which websites have been
the most helpful?
 Eligibility for VA financing
or other mortgage
programs?
 Concerns about the process
or market?
 Strategy for finding the right
property
 Importance of punctuality for
showing appointments
 Property viewing protocol
 Community information
sources
 What to do if another agent
approaches the buyer
 Can you help me estimate
how much I can afford?
 What is the advantage of a
mortgage pre-approval?
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My Pledge of Performance
Because I am committed to preparing you to be an educated buyer, I will:
 give you the most vital information on available homes
 keep you aware of changes in the real estate market
 arrange a tour of areas, schools and key points of interest
 provide neighborhood information on municipal services, schools, churches, etc.
 check applicable zoning and building restrictions
 disclose all known facts about properties I show you
 collect pertinent data on values, taxes, utility costs, etc.
 point out strengths and weaknesses of all properties you choose to view
 explain forms, contracts, escrow and settlement procedures
 discuss loan qualification and processing
Because I am committed to helping you save time, I will:
 provide ready access to all MLS listed properties
 assist you as needed on all unlisted properties
 help you select for viewing only those homes that fit your needs
 show you homes only in the price range most suited to your finances
 provide you a list of qualified attorneys, home inspectors or other service providers
 arrange for necessary property inspections
Because I am committed to helping you find the best value, I will:
 prepare studies of property values in chosen areas
 perform a market analysis on chosen properties
 discuss financing alternatives
 see that you get a complete estimate of all costs involved
 advise on offers on properties
 write and present your purchase agreement to the seller
 negotiate on your behalf
Because I am committed to you—my buyer–I will do all of this, plus:
 keep your personal information confidential at all times
 stay in touch with you from the day you start your search until the day you move in
 coordinate all aspects of the sale and closing
 be reimbursed with a commission only when we have a successfully closed transaction
Contact Information
Office phone: ________________________
Fax: ________________________________
Website: ____________________________
Mobile: _____________________________
e-mail: ______________________________
Agent Signature: __________________________________
Courtesy of Lynn Madison
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Date: ___________________
Do You Want to Represent This Buyer?
Do you encounter buyers who you may not want to represent? Be wary
of buyers who can drain you of time and resources. You may want to
think twice about the following types of buyers.
 Unmotivated
 May not be in a position to buy now, but they want to get a
"feel for the market and to see what's out there”

Say that they don’t want to rush things and may not decide on a
purchase for more than a year

Are reluctant to sign a buyer representation agreement
 Potentially unqualified
 Will not seek a mortgage approval until you find them the home
that meets their specific needs

State that they have credit problems

Lack adequate financial resources for the down payment,
closing costs, and mortgage payments
 Unrealistic
 Demand properties far below current market value
 Inconsiderate
 Are habitually late, miss appointments, or treat you
unprofessionally

Will not follow advice given in their best interests
 Questionable loyalty
 Have family members who are real estate agents and will not
sign a buyer representation agreement with you

Are working with several buyer's agents

Persist in negotiating directly with the seller or seller’s agent.

Are dishonest with you
 Ask you to perform unlawful acts
 Mischaracterize the use or occupancy of a property in order to
qualify for more favorable financing

Make demands that violate Fair Housing laws, knowingly or
unknowingly

Tell you that you shouldn't "look too closely" at W2 or 1099 tax
statements
63

Take or damage a seller's property during a showing and expect
you to "look the other way"

Want access to see homes without you
 Potential conflicts of interest
 Want to purchase a property you own or have interest in
Calling It Quits
There are times when you decide to call it quits with a buyer. How can
you say “you’re fired” without completely burning bridges? You could
say:
 “It looks like you need more time to think through your decision.
Let’s put things on hold for a while.”
 “I am sorry that I am not meeting your needs. It is probably best for
you to work with someone else.”
Buyers or Renters?
In today's market you may meet prospects who want to buy but really
need to become or remain renters. They may:
 Have experienced a distressed property sale or bankruptcy
 Be saving money for a down payment
 Have trouble repairing credit issues
 Fall short of qualifying because of stringent underwriting guidelines
Unfortunately, some agents may miss this opportunity because they
don’t see the tenant relationship as potential future business. Consider
tenant-clients as investments in future transactions. If you work with
tenants and protect their interests as you would a buyer-client, they will
refer business to you and remember you when they are ready to buy. Go
to page 169 in the Resources section of this manual for a Tenant
Information and Disclosure Checklist. Use this form to assure protection
of a tenant-client’s interests.
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65
The Buyer Representation Agreement
The elements that should be part of the buyer representation agreement
are:
 Exclusivity
Will you be the sole representative of the buyer-client? Although
this will vary according to state law and company policy, exclusivity
protects the right of the buyer’s representative to be compensated
when the buyer finds a property. Generally an exclusive agreement
is better than a non-exclusive or open agreement.
 Price, Property, Area
The description of the property states the client’s requirements in
general terms—such as a residential, commercial or rental property,
or land—without being overly specific. Price, if it is addressed in the
agreement, should be defined as a range that is broad enough to
encompass all the properties within the buyer-client’s parameters.
Area should cover the market area of the buyer representative
rather than a specific town or subdivision.
 Duration
How long will the buyer be your client? The primary factor that
determines duration is the buyer’s time frame. Other factors may
include your marketplace, desired property type, buyer’s needs,
and your broker’s business policies. The agreement should not
expire while the purchase is being finalized and closed.
 Services
The description of services should detail the range of duties and
tasks you are agreeing to perform as well as what is expected of the
buyer-client. Just as important as spelling out what you will do, as a
buyer’s representative, is specifying what you will not do, otherwise
known as limiting scope. For example, will you include FSBOs in the
property search?
 Compensation
The buyer representation agreement should set forth the
circumstances under which you will get paid, how much, and by
whom. There are different modes of compensation available to
buyer’s representatives and your office policy will likely delineate
the options.
66
 Consent to show properties to other buyers
State regulations may affect this, but generally such a provision, if
applicable, allows both you and other agents in your company to
show the same property to other buyers.
 Potential for a disclosed dual agency situation
This affects those in disclosed dual agency states and in companies
that allow disclosed dual agency. If the possibility exists, it should
be included in the buyer representation agreement. As noted
earlier, however, the buyer should not be asked to provide upfront
blanket permission for dual agency.
 Nondiscrimination
Discrimination is unacceptable under any circumstance. All federal,
state, and local statutes and regulations must be observed.
Remember that under federal Fair Housing Laws it is unlawful to
provide information about the race, color, religion, sex, handicap,
national origin, or familial status of individuals in a neighborhood or
building.
 Protection Period
If the buyer purchases a home you showed them within a certain
period after the agreement expires, you are due a commission.
 Assignment by Buyer
Obligates the buyer to pay a commission to the brokerage company
if another party purchases the property with the intent of assigning
the contract to the buyer prior to closing or selling the property to
the buyer after closing.
 Cancellation
Under what circumstances and how can the buyer or the agent
cancel the agreement?
Antitrust Warning
In order to discuss compensation concepts, we must talk about
commissions. It’s important to note that the following discussion
deals with concepts and principles not specific numbers or
percentages. Commission percentages, if discussed in class, are
presented only as examples.
67
Compensation Pop-Quiz!
Test your buyer’s representative compensation IQ.
1. It’s okay to avoid showing a property if the commission isn’t high enough.
 True
 False
2 If you show a listing that is not in the MLS you need a written commitment
from the listing broker to ensure you will get paid.
 True
 False
3. The buyer can ask a seller to pay the buyer’s representative.
 True
 False
4. The commission rate offered in the MLS listing applies to any agents licensed
in the state.
 True
 False
5. The buyer representative can use the purchase agreement to request a higher
commission from the listing office only if they have an exclusive agreement
with the buyer.
 True
 False
Four Contracts in Real Estate
Before beginning the discussion of compensation, it is helpful to review
the four types of contracts typically used in real estate transactions.
Understanding who is a party to the contracts and that only the parties
can modify their agreements helps to clarify the discussion of
compensation.
 Listing Contract
The listing contract is between the seller and the listing broker. It
creates the relationship between the parties, establishes the duties
of each and establishes the terms under which the broker will earn
commission. It also authorizes the listing broker to cooperate with
and compensate cooperating brokers. At the time of listing, the
agent must disclose to the seller how much compensation will be
offered to cooperation brokers.
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 Buyer Representation Agreement
The buyer representation agreement is between the buyer and the
selling broker. It establishes the duties of each and establishes the
terms under which the broker will earn commission.
 Offer of Compensation
The offer of compensation is between the listing broker and
cooperating brokers and is generally established thorough a
multiple listing service. The listing broker determines the terms and
conditions of the offer to compensate and the contract is formed
when accepted by the cooperating broker. Acceptance occurs only
through performance as the procuring cause of the sale.
 Purchase Agreement
The purchase agreement (sales contract) is between the buyer and
the seller. It establishes their promises and obligations to each
other. The brokers and agents are not parties to the sales contract.
Compensation
Compensation is one of the essential elements of a buyer representation
agreement, but real estate professionals are sometimes uncomfortable
discussing it. They may dodge the discussion by saying something like:
“My services don’t cost you anything because the seller pays my
commission. You won’t have to pay anything out of pocket.” But your
services are not free and you deserve compensation for your time and
expertise.
A good principle to keep in mind is that regardless of the compensation
arrangements, the buyer ultimately pays the buyer-representative’s fee
through the purchase price. If the buyer’s representative is compensated
through a commission split, it is true that the seller pays the listing agent
out of the sale proceeds, and the listing agent shares the commission
with the buyer’s representative. But it’s the buyer who puts the money
on the table by funding the transaction.
A buyer representation agreement could contain language like:
If, during the term of this contract or the protection period, Buyer
enters into a contract to acquire real estate and such contract results
in a closed transaction, Buyer agrees to pay Broker a fee of ____% of
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the purchase price. The Broker will make every effort to collect the
fee from the seller or the listing broker.
If Broker is not being offered compensation as a cooperating Broker
sufficient to satisfy Buyer's obligations, Agent will so inform Buyer
prior to showing the property.
Note that in all discussions of compensation the reference to buyer
representative does not imply that the agent can be paid directly. Due to
the various state definitions of broker—broker in charge, managing
broker, etc.—we are using the term buyer representative to mean the
firm for whom the agent works. All compensation must flow through the
brokerage company.
Compensation Options
 Percentage of sale price
The most common approach is a commission split with the listing
broker based on a percentage of the sale price. Ultimately,
however, your clients are responsible for your fees. They should
be informed that if the seller or seller’s broker does not pay your
fee, they must do so.
 Flat fee
Rather than charging a percentage of the sales price as
commission, the buyer representative agrees to work for the
buyer on a flat fee basis. In most cases, the buyer representative
will not take any compensation from the listing broker or the
seller and the buyer will accommodate the payment of
compensation.
 Hourly rate
The buyer may compensate the representative through an hourly
fee, similar to the way attorneys are compensated. The pay-perhour arrangement may guarantee compensation for a minimum
number of hours.
 Retainer
A buyer representative could charge the buyer a retainer fee.
State law would dictate how the retainer fee is handled relative to
where it needs to be held.
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Article 16, Standard of Practice 16-1
Article 16 is not intended to prohibit aggressive or innovative business
practices which are otherwise ethical and does not prohibit
disagreements with other REALTORS® involving commission, fees,
compensation or other forms of payment or expenses. (Adopted 1/93,
Amended 1/95)
REALTORS®, acting as exclusive agents or brokers of sellers/ landlords,
establish the terms and conditions of offers to cooperate. Unless
expressly indicated in offers to cooperate, cooperating brokers may not
assume that the offer of cooperation includes an offer of compensation.
Terms of compensation, if any, shall be ascertained by cooperating
brokers before beginning efforts to accept the offer of cooperation.
(Amended 1/99)REALTORS® may represent the seller/landlord and
buyer/tenant in the same transaction only after full disclosure to and
with informed consent of both parties. (Adopted 1/93)
REALTORS®, acting as subagents or buyer/tenant representatives or
brokers, shall not use the terms of an offer to purchase/lease to attempt
to modify the listing broker’s offer of compensation to subagents or
buyer/tenant representatives or brokers nor make the submission of an
executed offer to purchase/lease contingent on the listing broker’s
agreement to modify the offer of compensation. (Amended 1/04)
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When the Offer of Compensation Doesn't Match
What if the seller won’t compensate the buyer’s representative? Or if the
offered compensation is less than the amount shown in the buyer
representation agreement and the buyer can’t pay out of pocket? What
are the options?
 The buyer representative can call the listing office and request
additional compensation before showing the property. Any changes
in cooperative compensation must be by agreement between
brokers, not the agents.
 The buyer can ask the seller to credit the buyer at closing the
remaining compensation the buyer owes to his or her representative.
In this case, the purchase offer should contain a provision such as:
“Seller and/or any third party to the settlement and transfer of this
property agrees to pay buyer X% of the sale price to settle their
contractual agreement with their buyer agent at closing.”
 The buyer could instruct the buyer’s representative to reject the offer
of compensation offered from the listing broker and compensate the
buyer’s representative—or ask the seller to do it.
A sample of the language might be:
“ABC Realty rejects any offer of compensation made by the listing
firm. Seller and/or any third party to the settlement and transfer of
this property agrees to pay the buyer X% of the sale price to settle
their contractual agreement with their buyer agent at closing.”13

This rejection allows all parties, including the third party to the
transaction, to understand that what is being rejected is the
disclosed co-op portion of the fee only.

This ensures that the fee in the buyer agreement, worded as a
seller concession in the conditions of sale, will be fulfilled so that
the buyer client will not have any unforeseen risk for paying the
buyer’s agent.
 The buyer could choose not to view the property.
13
Excerpt from the SRS – Seller Representative Specialist Designation Course – Adorna
Carroll, Bruce Aydt and Steve Casper, partners of the SRS Council, LLP and
SRSCouncil.com.
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What if the offer of compensation is more than what is in the buyer
representation agreement? What if the seller or listing office is offering a
bonus on the property?
 A buyer’s representative must disclose any bonus or additional
percentage of commission that would be received. If buyers find out
afterward that you received a bonus or extra commission, they may
wonder if you were truly acting in their interests.
 The commission issue could be addressed by showing a range in the
representation agreement; for example, “If the fee collected is
between ____% and ____% of the purchase price, the Buyer's
responsibility for compensation will be deemed to be satisfied.”
Can You Rebate Part of a Commission?
Some brokers promote commission rebates as a competitive edge. Other
times, the buyer is short of cash and asks the agent to rebate part of the
commission to help with closing costs. Is this legal and ethical? Brokers
cannot pay a commission to an unlicensed person, but, if state
regulations allow, they can rebate a portion of the commission to the
buyer.
FSBOs
The first step is to contact the seller and explain that you have a qualified
buyer who is interested in the property. Ask if the owner is willing to
show the property and pay a commission. FSBO selling is quite common
in some markets and the request from a buyer’s representative isn’t a
surprise or unwelcomed; these sellers see themselves saving the listing
agent’s side of the commission. Whatever agreement you reach with the
seller, be sure that you have it in writing before you show the property.
What are the choices? For a sample agency disclosure and brokerage fee
agreement for unlisted property form, see page 165 of the Resources
Section of this manual.
 Ask the seller to pay a commission for bringing a qualified buyer.
 Increase the price by the amount of your compensation and ask the
seller to credit the buyer at closing so that the buyer can pay.
 Reduce the offer price by the amount of your compensation so that
the buyer can pay your compensation directly per the terms of your
representation agreement.
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Alternatively, the following language could be inserted into the purchase
contract.
“Seller to pay Buyer ‘an additional’ X% of sale price for the buyer’s
agent/Firm at closing paid through the proceeds of the sale.”11
VA Buyers
The U.S. Veteran’s Administration does not allow a buyer to directly
compensate a buyer's representative when VA financing is involved. If
you are working with a VA buyer, your compensation can only be a
commission split with the listing broker. The compensation percentage
stated in the buyer’s agreement cannot exceed the commission split
offered by the listing broker.
Additional Compensation Facts
 An offer of cooperation does not automatically include an offer of
compensation.
If the buyer’s agent is not a member of the MLS in which the listing
appears, then there is no unilateral offer of compensation from the
broker. Compensation should be established before beginning efforts
in connection with the property. Ask the broker, “Will you
compensate me if I bring you a buyer? How much will you pay?” And
get it in writing.
 The buyer’s representative cannot interfere with the contract
between the seller and the listing broker.
A buyer’s representative cannot use the terms of a purchase offer to
change the listing broker’s offer of compensation. For example, an
agent cannot include a purchase offer contingency to change the
commission percentage the seller pays to the listing broker.
 Are you “selling to commission”?
Are you searching the MLS for available properties based on the
amount of commission offered? If the answer is yes, you are violating
the Code of Ethics and most probably your license law. You are to
work in the best interest of your client - not yourself.
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When Buyers Won’t Sign
Buyers may be reluctant to sign a representation agreement because
they think it will limit their options and
impose undue obligations. Although
“Do I need to sign an
most buyers stick with the first agent
agreement before you
they talk to, no one wants to feel
have found me the right
pressured to make a commitment
property?”
before they know if the arrangement
will work out and if you can work
together. How can you allay concerns
but still make progress in establishing a
buyer-client relationship?
 Short-term agreement
If a buyer is uncomfortable with a long-term agreement, offer a
shorter term, for example, an agent-for-a-day agreement. The
agreement can be extended if the buyer wants to continue.
 Nonexclusive agreement
If the buyer doesn’t want to be tied down to just one agent, it’s
okay to offer a nonexclusive agreement (if your brokerage policies
allow it). The buyer should be aware, however, of the drawbacks of
such an arrangement.
“I commit my time
and expertise to
buyers who make a
commitment to work
with me.”
 Trial basis
You could offer to take the buyers out one time to view a couple of
properties in order to get acquainted and see how you can help
them. Be clear that an agreement will be required if you decide to
work together.
 Specific area
The terms of the buyer representation agreement could specify a
particular area or neighborhood; the buyer is not bound by the
agreement if they find a home outside of the specified area. The
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buyer should be aware, however, that such an agreement limits the
services you can provide.
 Permit the buyer to cancel
The agreement could include a clause allowing the buyer to cancel
the representation agreement if they are dissatisfied with your
services.
 Offer a guarantee
Offer a performance guarantee that spells out what you will do and
how you understand your duties. (A sample appears on page 62.)
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designation to you, you can access these consumer one-sheets at www.rebac.net. Sign
in with the REBAC membership ID number you will receive after REBAC processes
course completion information.
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Skill Practice—Meet Your Next Buyer
Darrell and Melissa, relocating
Darrell and Melissa are relocating, at their own expense, to your area from out of state. Darrell,
a database designer, lost his job when his former employer went out of business. After several
months he landed a new job with a start-up company in your area. Job prospects for Melissa
are good because her skills and experience as a dental hygienist are always in demand. Their
son Stewart starts second grade in the fall. Darrell and Melissa are under pressure to find a new
home and move so Darrell can start his new job and Stewart can enroll in school. They also
have a buyer under contract on their current home. While searching on the Internet, Darrell
saw your blog about the local real estate market and was impressed by your straight talk and
service approach. He sent you an e-mail regarding his job relocation and home search. The email is specific about what they need and want: 3–4 bedrooms, 2 baths, yard with room for a
swing set and garden, good public elementary school, family-oriented neighborhood, short
commute, and public transportation options. He will discuss price range, down payment, and
financing when you meet face-to-face.
Robert and Patricia, retirees
Robert and Patricia are past clients. You helped them buy their current home back when their
kids were teenagers. Now, the children are through college and establishing careers and
families, and Robert has retired. Robert and Patricia have decided it’s time to give up the
responsibilities and expense of maintaining a large home and move to a smaller house,
townhome, or condo. Over lunch at a favorite café, Robert and Patricia describe their future
plans and ideal new property. They are looking forward to traveling to visit children and
grandchildren as well as to “see the world.” They would prefer a 2-bedroom, 2-bath condo or
town home so they don’t have to worry about house maintenance and yard work. The
mortgage on their current home was paid off several years ago and they want to stay debt-free
in their retirement years. The cash proceeds from the sale of their current home will determine
the price range for the new home. They are in no hurry to sell—they can wait for the right
price. A neighborhood or development that is sensitive to the needs of older residents would
be nice, but they don’t want to live in a retirement community where, Patricia says, “there are
too many old people around!”
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Jim and Amy, referred by a past client
Jim and Amy were referred to you by a past client, Jim’s cousin. Jim and Amy want to relocate
in order to be within certain school districts, so they are very specific in terms of location. They
are also quite specific about their needs and wants for the new home. Jim and Amy want a
single family home with 4–5 bedrooms and 3 baths. Jim’s father recently passed away and his
mother may be moving in so one bedroom and bath must be on the ground floor. They also
want a big family room and yard. It would be nice to find a neighborhood with open space and
bike trails—bike riding is a favorite family-time activity. Jim is the general manager of a home
improvement store and has good contacts with contractors and builders, so a home that needs
some repair or remodeling might be okay if the price is right. Amy, a paralegal at a local law
firm, will transition from part-time to full-time when their son Douglas starts school. The
pressure is on to find the right home and move before the next school year starts. Although
they have cash to make a down payment, they can’t afford to carry two mortgages. They need
to sell their current home to purchase the new one.
Christina, first-time buyer
Christina called your office after visiting an open house hosted by one of your colleagues.
Christina is single and well established in a successful career as a graphic designer. She currently
rents an apartment—the lease expires in about four months—and she is excited about the
prospects of owning her own home. Christina is interested in a townhome or single-family
detached home with garden space. She would like a home that is energy-efficient. She prefers
to commute by public transportation. You have a pretty good idea of her price range based on
her reaction to the open-house property. Christina has a very close relationship with her
parents, Ken and Grace, who plan to provide half of the down payment. Since she is a first-time
buyer, Christina’s parents always accompany her to showings.
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Skill Practice
What issues do you foresee in the home search process?
What objections might the buyers have to signing an exclusive buyer representation
agreement?
What would you say to overcome those objections?
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3. Putting Buyer Representation Into
Action
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In the preceding chapter, we looked at forming the buyer-client
relationship and getting to a signed representation agreement. So what’s
next? Now it’s time to put your value proposition into action and deliver
the services that convinced the buyer to make a commitment to work
with you. Your next step is to find the right property, right price, and right
terms.
The Search Is On—House Hunting
Looking at homes can feel a bit like speed dating. Buyers are not only
looking at multiple properties in a short time frame, but also searching
for the perfect match. And, like dating, sometimes it is love at first sight
and sometimes finding the right home takes a lot of looking around and
accepting tradeoffs.
Managing Expectations
Part of your job, as a buyer’s representative is to take as much stress as
possible out of the house-hunting process. One of the best ways to
manage stress is to manage buyer-clients’ expectations of available
homes and price trends, market realities, and your services.
 Properties
Inform your buyer-clients that you will use your market knowledge
and connections to find homes that fit their needs, wants, and price
parameters. Encourage the buyer to focus on the things that are
most important and be willing to accept some tradeoffs on lower
priorities.
 Market realities
Present a realistic picture of the current market. Caution that trying
to time the market for rock-bottom prices or mortgage rates risks
losing out on the ideal home. Good homes priced right don’t stay on
the market long.
 Your services
Make sure that the services clients expect are what you said that
you would provide. Avoid making promises you cannot—or do not
intend to—keep. Refer to your pledge of performance (see page
62).
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3. Putting Buyer Representation Into Action
“No Stone Unturned”
Real estate agents who represent buyer-clients can do a “no stone
unturned” property search and even promote the buyer’s search through
a variety of media and channels, including word of mouth. The buyer’s
representative has access to the entire market including FSBOS, REOs,
and even off-market properties. And when it comes to your broker’s
new-on-the-market listings, the buyer-clients should get the first look.
There are really no limits on the property search except those
determined by the buyer-client.
When the Search Includes FSBOs
Despite the difficulties of selling on their own, 9 percent of home sellers
choose the FSBO route.14 Most do so to avoid paying the listing agent’s
commission. Although FSBO sellers report difficulties attracting buyers, as
well as getting the price right, approximately one-third (32 percent) do
nothing to actively market their homes. Can you see how these factors
might create an opportunity for you as a buyer’s representative?
If your buyer-client is interested in a FSBO, the first hurdle is making a
productive contact with the seller.
 During your first contact, inform the seller that you are a real
estate agent with (company name) and that you have a qualified
buyer, not a browser, who is interested in the home. Assure the
seller that you are not looking to list the home.
 When you contact the seller you could say, “Are you cooperating
with REALTORS®? What commission are you offering? Does the
price you are quoting include the commission?”
 However, if your buyer is compensating you, such as through a
flat fee, don’t make compensation an issue with the seller; if the
seller asks if you expect a commission, you can state that the
buyer will compensate you.
14
2013 Profile of Home Buyers and Sellers, National Association of REALTORS®,
www.Realtor.org/Research.
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Buyer Loyalty
The representation agreement creates the contractual relationship
between the buyer and the agent. But, as noted at the beginning of this
chapter, the interpersonal relationship makes the agent and buyer into a
team. Buyer loyalty is a two-way street and it starts with the words and
actions of the buyer’s representative. Your pledge of performance is a
powerful tool for building loyalty because it is a narrative of what you will
do and how you will treat the buyer.
Transparency of information and your willingness to answer any of the
buyer’s questions and address concerns will go a long way toward
establishing a mutually loyal relationship. Transparency includes being
frank about situations in which you would not get paid.
With so many sources of house-hunting information available, it seems
inevitable that buyers will look around and research on their own. You
can impress on buyer-clients the importance of calling you first whenever
they want to see a property and explain why. What other steps can you
take to prepare buyer-clients for these situations?
 Open houses and for-sale signs
At open houses, advise buyers to inform agents that they are
working with you and provide your name and company affiliation.
You could provide the buyer with a small supply of your business
cards for this purpose. Caution buyers against signing any
registration card or guest book, or revealing information that
could weaken negotiation leverage. If buyers see a for-sale sign,
ask them to note the listing agent’s contact information and call
you to set up a showing. They should not be coerced into putting
an offer on the property regardless of what the agent sitting in
the open house says.
 Model homes
Like an open house, your buyer-client should inform the builder’s
sales representative that they are working with you. Caution
against signing any registration card or guest book or visiting
model homes if signs say “agent must accompany the buyer on
the first visit.” Purchasing a new home involves decisions about
customization options. Inform your buyer-client that you can
advise on evaluating the cost-benefit of various options and
navigating the phases and process of buying new construction.
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 Newspaper ads and websites
What if your buyer-client sees an ad that looks interesting and
can’t resist calling or e-mailing for more information? Coach
buyer-clients to say upfront that you are helping them find a
home. If the price is in range and the buyers want to see the
property, say that you will make arrangements for them to see
the property. Caution buyers that websites are not always up-dodate; unless the site reflects real-time data from the MLS, homes
advertised on websites may already be sold.
 FSBOs
Caution buyers not to just pick up the phone, call the number on
the sign, and go on their own to see a FSBO property. It’s not a
safe thing to do. It can be a big waste of the buyer’s time and give
sellers the impression that no agent is involved.
 Auctions
Explain that you can scope out properties in advance, do CMAs,
and help the buyer develop a strategy to avoid getting caught up
in a bidding rush. You can also help the buyer prepare for the
auction terms like reserve bids and proof of funds. Just be sure
you register as the buyer’s representative before the auction.
 Contact by another agent
They should politely inform them that they are working with you,
thank them for their interest and possibly suggest they contact
you if they have a property they think may fit the buyer's needs.
 Drive by listed property and the seller invites them in
They should politely refuse and tell the seller they need to contact
you. You will then make an appointment to show them the
property.
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Showing Property Dos and Don’ts
Before
During
 Provide the buyer-client with a recap of their
needs, wants, and priorities in checklist
format
 Arrive on time for showings
 Provide an advance list of the homes to give
the buyer-client an opportunity to drive by
and check out the exterior and the location
 Don’t take anything that belongs to the owner or
damage the property—no loosening carpet to look
at flooring
 Provide a sample purchase contract so that
buyer-clients can be prepared with required
information when ready to make an offer
 Leave the property as you found it (lights, heating,
cooling, drapes)
 Wear slip-on shoes (and boots in bad weather)—
sellers may request you to remove your shoes
 If scheduling several hours of showings, make
arrangements for rest stops and snacks
 Remind buyers that no house is ever perfect and to
focus on the property’s potential and the aspects
that cannot be changed
 Encourage clients to arrange a babysitter for
children and leave pets at home
 Buyers should not feel they will hurt anyone’s
feelings if they reject a home
 Set expectations for appropriate behavior—
remind buyer-clients that they are a guest in
the seller’s home
 Be sure to look at the home’s surroundings—is this
a location where you want to live
 Stress the importance of punctuality and
explain why
 Recommend setting aside time after showings
to consider pros and cons or write an offer
 Don’t smoke or eat inside the home or use the
bathroom or sleeping facilities
 To help buyer-clients remember properties, use an
informal name that recalls distinctive features—the
picket fence house, the pink kitchen house
Eyes and Ears Everywhere!
Snapping photos with a smart phone or digital camera can help buyers remember the details of a
property. But buyers should not post those photos on social media; the photos could be used to case the
home or target the family. Caution buyer-clients not to post, text, or tweet comments that can easily
find their way back to the seller and harm the buyer’s negotiation leverage. When buyers are viewing a
property, it’s a good idea not to show strong reactions or make comments—good or bad; electronic
monitoring devices, like hidden web cams, can be anywhere.
After
 Use the needs-and-wants checklist to evaluate properties
 Review the properties and evaluate which come closest to meeting buyer needs, wants, and priorities
 Compare cost of ownership—utilities, taxes, upkeep, insurance—to the client’s budget
 Choose second-look properties as a preliminary to making an offer
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REALTORS® shall not provide access to listed property on terms other
than those established by the owner or the listing broker. (Adopted 1/10)
It may be tempting to allow experienced buyer-clients to look at
properties without your supervision. It is a serious error to give buyers
access codes or lock combinations to enter properties on their own. Such
an action violates the REALTOR® Code of Ethics and possibly MLS rules; in
some states, it violates license law.
?
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Discussion Question
How do you prepare buyers for looking at homes? What are your
best tips?
Procuring Cause
The principle of procuring cause is an unbroken chain of events that results in a successful
transaction. When disputes arise, real estate agents tend to equate procuring cause with “all
the work I did for this buyer.” The pivotal question is, however, whose actions “caused” the
buyer to decide to buy the property. Can you see how neither the act of showing a property nor
even a signed representation agreement with the buyer is sufficient proof of procuring cause?
For REALTORS®, procuring-cause commission disputes are decided by the Professional
Standards arbitration panel at the local association. Seven key decision points that panels
examine—and preventive steps the agent can initiate—are as follows:
1. When and how was the original introduction of the buyer made?
Preventive actions: Ask prospects if they are working with or have looked at properties with
other agents.
2. Did the original introduction start an uninterrupted chain of events leading to the sale?
Preventive actions: Maintain careful records of property showings, communications, and
interactions with buyer-prospects and clients.
3. Did the agent who made the original introduction maintain contact with the buyer? Did
the agent abandon the buyer?
Preventive actions: Stay in contact with buyers and keep them up-to-date on your actions
between meetings and showings.
4. Did the cooperating agent initiate a separate series of events, not dependent on the
original agent’s efforts, which led to a successful transaction?
Preventive actions: An exclusive buyer representation agreement might prevent this
situation.
5. Was the introduction of the other agent an intrusion into the transaction or cause
estrangement or abandonment?
Preventive actions: You can’t control the conduct of other agents and sadly some use
unethical ploys to lure other agent's buyer clients. Prepare your buyers.
6. Was the second agent aware of the prior introduction of the buyer to the property?
Preventive actions: Make sure your buyer-clients know what to say and do if approached by
another agent.
7. Did the agent do anything to cause the buyer to look elsewhere for assistance? Did the
agent’s actions estrange the buyer?
Preventive actions: Find out what is troubling a buyer and make an effort to resolve the
problem.
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Fair Housing and the Buyer’s Representative
As you work through the process of establishing the buyer’s wants and
needs and showing properties, your questions should focus on learning
objective, non-discriminatory information such as price range, property
features, and preferred locations. Be careful when qualifying buyers not
to tell them that they cannot afford a particular home or neighborhood.
Such a statement could be considered steering. Buyers should be offered
a range of choices that meet their criteria in a variety of neighborhoods.
Bottom line—it’s the buyer’s decision.
What if buyers ask questions you cannot legally answer, like the racial
composition of a neighborhood? Although buyers may ask, real estate
professionals should never estimate or give an opinion on the racial,
religious, or ethnic composition of a neighborhood. Instead, focus on
providing objective data from third-party sources. Thanks to an
abundance of websites, statistical information is now available online to
address a wide range of buyer-client queries. These include
neighborhood income levels, education levels, school ratings, crime
statistics, median incomes, age, voting patterns, air pollution, and many
other aspects.
Your presentation packet could include a statement on fair housing rights
as well as a list of sources for community and neighborhood information.
The consumer one-sheet on the preceding page summarizes what buyers
should expect.
All federal, state, and local fair housing laws and regulations must be
obeyed in all dealings with customers and clients.
 Federal fair housing law specifies seven protected classes:
Race, color, religion, sex, handicap, familial status, and national
origin.
 Some state and local governments have defined additional protected
classes such as: age, sexual preference, source of income, marital
status, age, military status and/or discharge, ancestry, parental
status, and housing status (homeless).
What additional protected classes does your state or local
municipality have?
___________________________________________________
___________________________________________________
___________________________________________________
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 The REALTORS® Code of Ethics includes sexual orientation and gender
identity as protected classes.
Article 10
REALTORS® shall not deny equal professional services to any person for
reasons of race, color, religion, sex, handicap, familial status, national
origin, or sexual orientation and gender identity. (Amended 1/13)
Which Law Prevails?
What if, for example, the local law does not prohibit discrimination based
on handicap, but the federal law does? The federal fair housing law
always prevails. Federal statutes should be considered as the minimum
laws. However, you must also comply with local and state laws at all
times. As a rule of thumb, comply with the law that provides the greatest
protection against discrimination.
How Will You Respond?
 What is the racial composition of this neighborhood?
 I am Asian. Do you serve any areas that I would feel at home in?
 What kind of people live in this neighborhood?
Never estimate or give an opinion on the racial, religious, or ethnic
composition of the neighborhood. Focus on providing objective
data from third-party sources and make sure you provide this
information to all clients. Refer home buyers to sources of
information such as the websites, or the local municipal offices so
they can research the questions themselves. Focus on economic
status and occupation, which are not protected by Fair Housing law.
If you mention people you know or have worked with in the area,
do not describe them in a way that includes a protected class. For
example, you could say, “this is a middle-income neighborhood.
Many of the folks who live here work at the businesses downtown
because it is an easy commute.”
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 How are the schools in this area? Are they good? Are the schools
integrated?
Provide the buyer only with reliable and authoritative information,
such as student-teacher ratios, expenditures per pupil, percentage
of students who go on to college, the number of National Merit
scholars, and the like. Refer the buyer to sources of information,
such as the school or the school district’s main office. Maintain the
same type of information for each school and never favor one
school over another. Never attempt to influence a housing choice
with either complimentary or negative general comments about the
school or give an estimate or opinion of the racial, religious or
ethnic composition of the student body. You could say, “Our office
does not maintain statistics regarding the racial makeup of the
student body of schools in our market area. To get the best answers
to your questions, you should contact either the school or the
school district’s main office. Also, you might want to check with
some of your potential new neighbors about how they feel about
the schools their children attend.”
 Why don’t you just pick out some properties in safe areas?
 Would you live here?
Give your honest opinion, whether it’s positive or negative, to this
question and give a non-discriminatory reason that focuses on the
attributes of the property. Never mention or volunteer information
related to the racial, religious or ethnic makeup of the area. You
could say, “Yes, I would. The area is well-maintained and that
particular house is very nicely located.” Or, “No, I wouldn’t because
the house is too small for our family.” Or, “No, I wouldn’t because
it’s too far from my spouse’s office.”
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Statement of Fair Housing Policy
As noted earlier, the buyer representation agreement should include
language indicating the company’s commitment to equal housing
opportunity and a statement that the agent may not lawfully disclose
information regarding race or other protected classes. For example:
It is the policy of (firm name) to abide by all local, state, and federal fair
housing laws and not discriminate against any individual or group of
individuals. The agent may not lawfully disclose the racial, ethnic or
religious composition of any neighborhood, community, or building, nor
whether persons with disabilities are housed in any home or facility,
except that the agent may identify housing facilities meeting needs of a
disabled buyer.
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Skill Practice Scenarios
Darrell and Melissa
Darrell and Melissa want to make an offer one of your colleague’s listings. The property is listed
at $259,000. A few weeks before you met Darrell and Melissa, your colleague told you that
there was an accepted offer for $235,000 that did not close due to buyer financing problems.
She also confided that the sellers are very motivated and growing increasingly anxious about
selling their home. In addition to being very motivated, the sellers were willing to accept a
reduced price now because a property inspection turned up problems with the roof, which will
probably need to be replaced within a year. Plus the kitchen appliances are old, but still
functional. Based on his Internet research on Trulia and Zillow®, Darrell and Melissa want to
make a $245,000 offer on the property.
 What are the issues involved in this scenario?
 Should you tell Darrell and Melissa that there was an earlier offer of $235,000?
 What would you do next?
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Robert and Patricia
You lined up six properties for Robert and Patricia to view, one of which is a condo that you
made a listing presentation on. Although you didn’t get the listing, in the course of the
conversation you learned the seller's motivation, bottom line price, and other information
pertinent to the sale of their property. When Robert looks at the listing he says, “We’ve already
seen one of these condos at an open house and really liked it. We knew better than to say
anything that would harm our negotiating position if we decide to make an offer. That’s okay,
right?” You asked if Robert and Patricia told the open house agent that they were working with
you or if they signed anything. Patricia says she doesn’t think so, but really can’t remember.
They have looked at so many open houses it’s kind of a blur.
 Is it a problem that Robert and Patricia have already seen the condo?
 How could you prepare them for open houses?
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Jim and Amy
Jim and Amy are scouring the neighborhoods in their first-choice school district. One Sunday
afternoon, they drive by a FSBO property that looks very attractive. The owner is outside
mowing the lawn and invites Jim and Amy in to see the house. It’s love at first sight for Amy and
she is already picturing how she will decorate the house for the holidays. Jim suspects the
house has some delayed maintenance issues. Also, all of the bedrooms and bathrooms are on
the second floor. Will it be possible to add on a ground floor addition? When Jim asks why the
house is for sale, the seller says that the home was listed with an agent but it didn’t sell before
the listing expired. Jim asks the seller if you can contact them tomorrow and the seller says that
would be okay.
 What would you say to the FSBO seller?
 Is it a problem that Jim and Amy have already seen the home?
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Christina
Christina and her parents are touring loft apartments. Her face lights up when she walks into a
newly renovated loft apartment and she wants to share her excitement with friends. She starts
snapping photos with her phone and tweeting about the loft. The builder’s sales agent, picking
up on Christina’s excitement, enthuses about how quickly the neighborhood is gentrifying. The
sales agent says this is a chance to buy into tomorrow’s trendy neighborhood before prices
really go up. Christina’s father, checking out the HVAC, asks how much it will cost to heat and
cool the loft. He also asks about the property taxes. Christina’s mother asks, “Do you think this
is a safe neighborhood for a single woman? Would you live here?”
 How would you respond to questions from Christina’s mom about the neighborhood?
 What would you say to Christina about taking photos and texting?
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4. Offers, Counter Offers, and Negotiations
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After finding the right property, the next most important services that
buyers say they want you to assist with are help negotiating price and
terms.
Preparing the Buyer
As you help buyers formulate an offer, think of the process as a “training
the buyer-clients” seminar to help them understand the give-and-take of
the offer and negotiating process. Educating first-time buyers is
particularly important because they may be intimidated by the
paperwork as well as the unknown venture they are undertaking. You
may need to educate your buyer-clients on important facts about making
an offer.
 An offer is a contractual commitment between the buyer and seller.
Once signed, both parties are legally obligated to contract terms.
 Making offers on several properties at the same time, just to see
which one will elicit the first and best response, is very risky because
the buyer can be on the hook for every accepted offer.
 Providing sample forms (with the blanks filled in with examples of
information) familiarizes buyer-clients’ with this step in the
transaction process.
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 Verbal promises are not enforceable. Everything regarding the
transaction must be in writing.
 Planning and following through with a strategy avoids “negotiations
fever.” Negotiating the price and terms is not a game. Prolonged
back-and-forth negotiations risk annoying the seller or losing out to
another offer.
 In a hot sellers’ market with multiple offers likely, buyers should try to
present their best offer first because there may not be another
opportunity.
 If the seller makes a counter offer, which should be in writing, the
buyer may accept or reject it, or make a counter offer. If sellers reject
an offer, they cannot change their minds later and hold the buyer to
the terms of the offer; the same is true if a buyer rejects a seller’s
counter offer.
 An offer may be revoked up to the time it is accepted or the buyer is
notified of acceptance. Revoking an accepted offer, however, is a
serious step that can result in loss of earnest money or a lawsuit
brought by the seller for recovery of damages.
Confidentiality of Offers
Sellers and their agents are not obligated to
keep buyers’ offers confidential. If your buyerclients don’t want the offer details or their
identity disclosed to others, consider asking
the sellers to sign a confidentiality agreement
before presenting the offer. In some states,
license laws prohibit disclosure of the terms of
competing offers unless the parties specify
what their agents may disclose. Confidentiality
agreements are more common in commercial
transactions than residential.
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Prepare a CMA
Preparing a winning offer starts with a detailed CMA, similar to the one
prepared for sellers. Be sure to check your CMA results against online
value estimators like Zillow® and Trulia. Your buyer-clients probably
check values on these websites and you need to be prepared to respond
to concerns about differences in estimated values.
If you have access to the Realtors Property Resource® and the Realtors
Valuation Model® (RVM®), the Property Report provides an estimated
value based on real-time MLS data and assembles a comprehensive
profile of the neighborhood and property. The Property Analysis for
Investors tools on the Details tab lets you choose a strategy—buy and
hold, resell, or rent—and adjust the variables for investment goals,
financing, and property conditions. Export the results to an Excel®
worksheet.
Are you acting as a disclosed dual agent in a transaction? Although statespecific, if while acting as a disclosed dual agent you prepared a CMA for
the seller, you should also do so for the buyer. Not doing a CMA for the
buyer puts him at a disadvantage.
Formulating an Offer
Market and property facts from the CMA provide the basis for making an
offer.
 Market facts

Price of similar properties—look at list and sales prices on similar
properties in the same area

Price trends—current percentages of list compared to sales price

Supply and demand—in a high-demand, low-supply market, your
buyer’s offer may be competing with others

Absorption rate—number of month’s supply of inventory

Average time on market—cumulative market time is critical
 Property facts
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
Property condition—is it in good condition or must the buyer
make substantial investments in repairs?

Length of time on the market—a long time on the market may
indicate a slow market or some problem with the property.

Seller’s motivation— a seller under pressure to close a deal may
be more receptive than one who can wait until the “right offer
comes along.”

Terms—what terms and contingencies must be written into the
offer? Terms that make an offer attractive include an all-cash
transaction, pre-approval for financing, quick closing, and few
contingencies or seller concessions.

Return on investment—for a commercial and investment buyers,
the future income stream and return on investment is an
important consideration in developing an offer.

History of property—previous sales and financing history

Review disclosures buyer is entitled to receive
Inclusion of all personal property (and possibly fixtures to avoid
confusion) that the buyer wants to have remain with the property. The
sales contract supersedes whatever is being offered in the MLS and the
seller has the right to take his personal property with him if it is not
included in the contract. Often the loan officers ask to have the personal
property removed from the contract and put on a separate addendum.
Legal counsel should be consulted prior to creating an additional
document that is not disclosed to the lender.
Contingencies
Contingencies protect the buyer from events that would impact the
decision or ability to go through with the purchase. Protecting the buyer’s
interests must be weighed against the conditions of the property, the
seller’s circumstances, market dynamics, and the buyer’s priorities. Too
many contingencies and protective clauses weaken an offer.
Common contingencies, often written into standard contracts, include a
satisfactory home inspection report, approval of financing, and sale of a
current home. Contingencies may be added based on the property or
circumstances of the seller or buyer.
Commonplace buyer contingencies include:
 Attorney review
 Inspections; full house, mold, radon, pest infestation, etc.
 Mortgage financing approval within a specified interest rate range
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 Sale of a current home
 Receipt and approval of homeowner association documents
 Early occupancy (with payment of rent) or furniture move in
 Appraised value not lower than offered amount
 Home warranty
 Personal property included in the sale (e.g. appliances, draperies)
 Subject to determination of affordable home owners insurance
 Subject to determination of flood plain issues
 Verification that all improvements were made with proper
permits issues and all certificates of occupancy were issued
Seller concessions could include:
 Permitting the buyer to move in quickly
 Help with financing
 Renting to the buyers with an option to buy
 Paying some of the buyer’s closing costs
 Paying for improvements such as exterior painting or repairing
defects discovered during inspections
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designation to you, you can access these consumer one-sheets at
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Negotiation “Know-How”
Some cultures accept negotiating and haggling over price as an everyday
occurrence. But for many buyers—probably a lot of your buyer-clients—
the idea of price negotiations ups the stress level considerably. There’s
no doubt that the stakes are high for both the buyer and seller; it’s a
major financial endeavor for both. Your buyer-clients want to rely on
your experience, professionalism, and mettle as a negotiator to ease the
anxiety and help them make the right moves. Acknowledge that it is a
stressful situation and remind clients that the process of negotiations is
reaching agreement—not competition or grinding an opponent into the
ground.
The Secret Ingredient—You!
The main ingredient of negotiating know-how is information about the
market, the property, the seller’s situations, and the buyer’s objectives
and financial capabilities. Of course, all the information in the world will
not be much help without a strategy for applying it. Following the 5-step
formula for a successful offer and negotiation strategy produces the
results your buyer-clients want—the right house, right price, right terms.
The secret ingredient, of course, is you and your experience.
1. Evaluate your buyer-client’s negotiating position
2. Reassess the buyer-client’s objectives
3. Develop an offer price
4. Plan an offer and negotiation strategy
5. Present the offer and follow through
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Evaluate the Buyer-Client’s Negotiating Position
Market
Property
Buyer Advantages:
 Buyers’ market with many affordable
properties available
 Low point of seasonal cycle
 Weakening economy/high unemployment
 High interest rates generally mean fewer sales
and a better negotiating position for buyers
Buyer Advantages:
 Many similar properties in the area and on the
market
 New home construction weakens seller’s
position on existing homes
 On market for a long time
 Property needs repairs or remodeling
 Distressed sale—REO, foreclosure, short sale
Buyer Disadvantages:
 Sellers’ market with few affordable properties
available
 High point of seasonal cycle
 Strengthening economy
 Low interest rates attract more buyers and
strengthen the seller’s position
 Few similar properties in the area and on the
market
 Unique property
 Lack of new construction increases
competition for existing homes
 Pending offers
 Rapid property value appreciation
Questions:
 Is it a buyers’ or sellers’ market?
 Is it the high or low point of a seasonal cycle?
 How high are interest rates?
 What are general economic conditions
nationally, locally (employment, inflation,
interest rates)?
 What is an acceptable tradeoff between high
or low interest rates and strength of
negotiation position?
Questions:
 How does the property compare to similar
ones in the area?
 How long has it been on the market?
 Have there been other offers that fell through?
 Are there offers pending?
 Does the property need repair or remodeling?
Increase Buyer Advantage By:
 Taking advantage of favorable interest rates
and mortgage terms
 Timing the purchase with the seasonal cycle
and/or favorable market conditions
 Recommend that buyers widen the search area
or re-evaluate their needs and wants
 Ask for a warranty
 Include protective contingencies
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Evaluate the Buyer-Client’s Negotiating Position
Buyer Finances
Seller
Buyer Advantages:
 Large down payment
 High income in relation to mortgage
payment
 Favorable credit history
 No current home to sell
 Pre-approved for financing
 Low debt load
Buyer Advantages:
 Personal rapport with seller
 Agreement on terms and occupancy dates
 Hghly motivated seller
 Few contingencies
 Low cash reserves
 Low income
 History of credit problems
 Borderline position for financing
 Will need seller financing or cost-sharing
 High debt load
 Personality clash with seller or seller’s
representative
 Many contingencies
 Seller in no hurry to sell, can wait for right
offer
 Low equity in property
Questions:
 Is the buyer eligible for FHA, VA, or
financing assistance?
 Must the seller provide financing or share
closing costs?
 Can the buyer’s credit history be
improved?
 Must the buyers sell their current home
before closing on the new one?
Questions:
 What are the seller’s motivations and
objectives?
 Why is the property being sold?
 What is the seller’s experience with real
estate transactions?
 How important are the contingencies?
 Recommend mortgage pre-approval
 Limit contract contingencies
 Recommend the buyer-client try to pay
down credit card balances and other loan
commitments
 Building personal rapport with the seller
 Setting aside personal issues with the
seller or seller’s agent that impact
negotiations
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1. Evaluate the Buyer’s Negotiating Position
Assessing your buyer-client’s negotiating position involves collecting and
evaluating information about market conditions, the property, the
buyer’s financial strength, and the seller’s situation. Discussing pros and
cons helps you and your client articulate a negotiating position and
rationale. Use the checklists on the preceding pages to help assess
negotiation position factors.
2. Reassess the Buyer Client’s Objectives
A good starting point is a review of the objectives and priorities identified
during the consultation. Priorities may shift as buyers view properties,
learn about the market, and experience the give-and-take of offer and
counter offer. Ask the buyer to prioritize, and reprioritize if necessary,
the importance of:
 Price
 Terms
 Closing date
 Personal property to be included in the sale price
3. Develop an Offer Price
How would you respond if your buyer-client says something like, “Just tell
me how much to offer.” You could say:
“How much you decide to offer on a property is your decision. I will help
you understand the information that goes into deciding on an offer price.
For example, I’ll provide a comparative market analysis with the list and
sales prices of similar homes in the area. I’ll also help you plan an offer
and negotiation strategy to achieve your objective of closing on the home
(or investment) you ultimately choose to make yours. The strategy will
factor in variables like





What the listing agent has told us about the seller’s situation?
How long the property has been on the market
Does the property have a history of price reductions?
Information we can gather from public sources
What comparable properties have been selling for
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

Competing properties currently on the market
Percentage of list price currently being received in the
marketplace
I know it sounds like a lot to digest but I have ___ years of experience in
formulating offers as well as analysis tools to help me. As we put all of
the factors together and talk it through, I think you’ll see that the offer
price and strategy becomes very clear.”
4. Plan an Offer and Negotiation Strategy
When do you start planning a negotiation strategy? Planning a
negotiation strategy goes hand in hand with formulating an offer because
negotiations begin with the buyer’s initial offer.
Help your buyer-client analyze the offer from the seller’s viewpoint. For
each term that is important to the buyer, think about how the seller my
counter. For example, “If our initial offer is 10 percent below list price
how might the seller respond? If the seller counter offers with a 3–5
percent reduction, the next step will be: a) accept or b) offer 7 percent
below list or c) ask for help with closing costs.”
Knowing what to do when a seller responds can relieve a lot of anxiety
for the buyer-client. It can help buyers feel some degree of control over
the process even when they are waiting for sellers to respond.
Is It a Buyers’ or Sellers’ Market?
Strategies for a Buyers’ Market
Strategies for a Sellers’ Market







Keep up-to-date on price adjustments
Shop around for good mortgage terms
Request contingencies or extras like a
home warranty
Ask the seller to help with closing costs
Shorten the time for the seller’s
acceptance
All cash or a mortgage pre-approval
provides even more leverage than in a
seller’s market
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



Obtain a mortgage pre-approval
before making an offer
Offer the list price or more
Make the first offer the best offer as
there may not be a counter offer or
another opportunity
Minimize contingencies and don’t ask
for seller help with closing costs or
financing
Pay cash for all or most of the
purchase
5. Present the Offer and Follow Through
Negotiations begin officially with an initial offer and end when the final
offer is accepted. As the process of buyer’s offer and seller’s response
plays out, the buyer’s representative must always remember that the
client is the decision maker. Working toward a purchase contract involves
presenting the client’s offer in the best possible light and implementing
the planned strategy if there are counter offers or multiple offers. Your
role is to provide information and advice, not to determine what is best
for the client.
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Skill Practice Scenarios
Darrell and Melissa
Darrell and Melissa are feeling time pressure to find the right house and move. There are two
homes that look good to them and either one would be acceptable if the price and terms are
right. One home is listed at $245,000 and the other at $239,000. Darrell and Melissa’s target
price is no more than $235,000. Darrell asks you if it’s okay to make offers on both properties at
the same time.
 What are the strengths and weaknesses of Darrell and Melissa’s negotiation position?
 How would you advise Darrell and Melissa to proceed?
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Jim and Amy
Two days ago, you contacted the FSBO sellers of the property that Jim and Amy really want. So
far no one has returned your phone calls. Jim and Amy are ready to make a full-price offer. This
morning the property popped up on the MLS as a “new listing.” The original listing agent
contacted them, relisted the property, and now has a buyer who is interested in the home. The
list price, however, is now $10,000 higher than the sale price the FSBO sellers quoted when Jim
and Amy looked at the house.
 What are the strengths and weaknesses of Jim and Amy’s negotiation position?
 How would you advise Jim and Amy to proceed?
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Robert and Patricia
Robert and Patricia really liked one of the condos you showed them and the seller liked them
too. The elderly sellers were present when Robert and Patricia viewed the condo and they all
really hit it off. Now Robert and Patricia want to make an offer. The sellers have already
received one offer, to which they haven’t responded because they just really like Robert and
Patricia and would like them to have their condo. The sellers instruct their listing agent to tell
you the amount of the other offer so that Robert and Patricia can match it and get the condo.
 What are the strengths and weaknesses of Robert and Patricia’s negotiation position?
 Does the listing agent have to tell the buyer with the other offer what’s going on?
 Is there anything left to negotiate?
 How would you advise Robert and Patricia to proceed?
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Christina
Before calling you to start the offer process, Christina pulled up a Zillow® report and found a
value estimate that is lower than what the sellers are asking or what you said comparable
properties are going for. Christina posts to all her Facebook friends how excited she is about
negotiating for the loft. She asks for suggestions on negotiating and her friends respond with
lots of ideas on strategy.
 What are the strengths and weaknesses of Christina’s negotiation position?
 How would you respond to the Zillow® estimate?
 Do you see any problems or concerns with this online chatting?
 What if the buyer’s representative was posting this to Facebook?
 How would you advise Christina to proceed?
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Presenting an Offer
The REALTOR® Code of Ethics states that all offers and counter offers
must be presented to the clients up to closing or until the sellers state, in
writing, that they no longer want to entertain offers. Your duties to a
buyer-client require a timely submission of the buyer’s offers and
responses to counter offers.
REALTORS®, acting as agents or brokers of buyers/tenants, shall submit
to buyers/tenants all offers and counter offers until acceptance but
have no obligation to continue to show properties to their clients after
an offer has been accepted unless otherwise agreed in writing.
REALTORS®, acting as agents or brokers of buyers/tenants, shall
recommend that buyers/tenants obtain the advice of legal counsel if
there is a question as to whether a pre-existing contract has been
terminated. (Adopted 1/93, Amended 1/99)
How important is confidentiality to your buyer-client? As noted earlier,
the seller and seller’s representative are not legally obligated to keep
offer details or the buyer’s identity confidential. If your buyer-client
requires confidentiality, the buyer should ask the seller to sign a
confidentiality agreement before you present the offer. If the seller
refuses to sign, your buyer-client must consider whether or not to go
ahead with presentation of the offer.
Can You Personally Present An Offer?
Why would you want to personally present a buyer-client’s offer?
 You know your buyer-client’s objectives, concerns, and priorities.
 You may learn more about the seller’s situation and concerns, and
be better prepared to advise your buyer in a counter offer situation.
 You will be confident that your buyer’s offer was presented to the
seller and its terms were described objectively and hopefully in a
manner that favors your client.
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 Your professionalism and competence in handling the negotiation
process will be enhanced and your buyer-client’s confidence in your
services and ability will be reinforced.
NAR’s MLS model rules allow the buyer representative to be present
when offers and counter offers are presented to the seller. For buyer’s
representatives, personally presenting is an opportunity to put their
client’s best foot forward. There are advantages for the seller’s
representative too because the buyer’s representative can explain the
buyer-client’s issues directly to the seller and listing agent. NAR’s MLS
model rules state:
REALTORS® MLS Policy Statement 7.73
Cooperating participants or their representatives have the right to
participate in the presentation of any offer they secure to purchase or
lease to the seller or lessor. They do not have the right to be present at
any discussion or evaluation of the offer by the seller or lessor and the
listing broker.
Making a Successful In-Person Offer Presentation
Every seller wants to see offers, but not every offer is one that a seller
wants to see. Regardless of the particulars contained in an offer, you can
enhance its acceptability by creating a friendly atmosphere and setting a
constructive tone.
 Create a friendly atmosphere
 Introduce your buyer clients into the conversation as real
people, not adversaries.

Tell the sellers how much you enjoyed showing their home.

Describe aspects of the home that your clients particularly like.

Avoid discussion of any negative attributes of the property or
the seller’s disadvantages.
 Explain the offer
 Explain the buyer’s rationale, concerns, and limitations.

Stress the positive attributes of the offer, such as your client’s
financial qualifications, large down payment, agreement on the
settlement date and personal property, and the like.
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 Leave
 You should expect to leave after presenting the offer, unless
invited to stay, so that the seller and seller’s representative can
discuss it privately.
 Presentation of counter offers
 The seller’s representative may ask to participate in the
presentation to your buyer-client of a seller’s counter offer.
When You Can’t Personally Present an Offer
What if the seller refuses to allow you to personally present your buyerclient’s offer? Your client can add a contingency to the purchase
agreement stating that the buyer’s representative must be permitted to
present the offer to the seller in person. If, on the other hand, the seller
doesn’t want to interact with the buyer’s representative, such a
contingency could jeopardize the opportunity to purchase the home.
Ask yourself, and your buyer-client, “Does personal presentation of an
offer advance and protect the buyer’s interest?”
When you cannot be present, consider taking the following actions:
 Verify that the listing agent is available to receive the buyer’s offer
before faxing or e-mailing it.
 Consider personally presenting the buyer’s offer to the listing
agent.
 Include a cover letter written by the buyer.
 Request upfront, if not already covered in the contract, that the
seller counter or reject the offer in writing
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Offers on REO Properties
 Making the offer

The offer is made to the bank or lender, usually through a representative of an asset
management company.

The buyer must present a signed contract with earnest money.

The buyer must provide a proof of funds and pre-approval for financing.
 What to expect

Pressure for a quick closing date.

Property sold in as-is, where-is condition.

Asset managers are usually not licensed real estate agents or sales-oriented.

No seller disclosures or concessions like price reductions for repairs.

No contingency for sale or close of a current home.

In the time it takes for the bank to respond with a signed contract, there may be other
offers which must be presented to the seller, unless the bank has stated that they will
not entertain any more offers.

Acceptance is handled through a counter addendum which is sent by the bank

Counter addendum issues include: altering inspection periods, modifying seller
warranties, changing financing provisions, imposing penalties for failure to close, and
environmental disclaimers.

All deals are subject to review by senior management. The property is not under
contract until the lender signs the counter addendum. No notice to the MLS is
required until the property is under contract.
 Protect your buyer-client

Don’t write on the counter addendum documents—mark ups will invalidate it.

Check the counter addendum for alterations from the agreed terms.

Encourage your buyer to schedule a thorough home inspection.

Schedule a final walkthrough to assure the property condition has not changed.

Take photos for the buyer at the time of purchase contract as a precaution in the
event the property is not in the same condition at time of closing.

Meet all deadlines for inspections and closing.

Close on time—penalties may be assessed for delays and extensions, regardless of
which party caused the delay.
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Offers on Short Sale Properties
 Making the offer

The offer is made to the seller, who signs the contract, but the lender must it.

Provide a proof of funds and pre-approval for financing with the contract.

The contract should have a reasonable chance of closing: Offer a fair price—a lowball
offer risks a lender turn down, provide a fair amount of earnest money, carry out the
home inspection and mortgage application I a timely manner.
 What to expect

The lender makes the final call on price and terms, which may change even after
acceptance.

Although initial response may be timely, it may take a very long time (30–180 days) to
receive an approval from the lender.

Buyer must be flexible on their closing date.

Pressure for a quick close after the lender approves the short sale.

The property is usually sold in as-is condition; don’t expect the seller or lender to
make repairs.

A seller’s acceptance of a contract is contingent on bank approval; the seller’s
acceptance does not guarantee the lender’s approval of the purchase contract.
 Protect your client
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
If the buyer does not want earnest money deposited before the lender accepts the
offer, if should be noted on the contract. This could weaken the offer.

Encourage the buyer to comply scrupulously with the lender’s property inspection
provisions as stipulated in the contract.

Try to determine the lender’s policy on subsequent offers and try to include a “no
subsequent offers” clause in the contract.

Check for liens on the property—multiple liens complicate the process.

Stipulate in the contract the time frame for submission of the short sale package by
the seller. How long the buyer will wait before withdrawing.

Update the CMA on the property. The value can decline during a long wait for lender
approval.
Multiple Offer Situations
Multiple offers weaken a buyer’s leverage. Sellers are neither obligated
to consider offers in the order that they were received, nor accept the
highest bid if a lower bid presents more attractive terms. And it doesn’t
have to be a seller’s market for a seller to receive multiple offers on a
property.
Multiple offers complicate the situation because buyers must consider
not only their own interests and capabilities along with the property’s
condition, but also the unknown factor of other buyers’ interests and
capabilities. When a multiple-offer situation arises, consider the following
factors as you help your buyer client formulate an attractive offer:
 What is your responsibility, as the buyer’s representative, to your
buyer-client and how do you best meet it?
 Who made the other offers? A customer from the listing office or
another cooperating brokerage? A buyer-client or customer of
another salesperson from the listing office?
 Who should present the buyer-client’s offer? Should the buyer’s
representative request to be present when other offers are
presented? Or, is it in your buyer-client’s best interest for the listing
agent to present that offer to the seller along with other offers? Or,
would it be better to ask the broker of the listing office to present
your buyer-client’s offer, instead of the listing agent?
REALTORS, in response to inquiries from buyers or cooperating brokers
shall, with the sellers' approval, disclose the existence of offers on the
property. Where disclosure is authorized, REALTORS shall also disclose, if
asked whether offers were obtained by the listing licensee, another
licensee in the listing firm, or by a cooperating broker.
Does the Listing Agent Have to Tell You?
Some real estate professionals believe, incorrectly, that they are required
to automatically disclose the existence of multiple offers on a property,
whether or not the buyer’s representative asks about other offers or the
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seller wants to divulge this information to buyers. The buyer or buyer’s
representative must ask for this information and the seller must consent
to divulging it.
Listing agents are, however, required to disclose the existence of a
variable rate commission if one exists. The buyer agent is responsible for
asking about the variable rate when it has been appropriately disclosed in
the MLS.
REALTORS®, acting as listing brokers, have an affirmative obligation to
disclose the existence of dual or variable rate commission arrangements
(i.e., listings where one amount of commission is payable if the listing
broker’s firm is the procuring cause of sale/lease and a different amount
of commission is payable if the sale/lease results through the efforts of
the seller/ landlord or a cooperating broker). The listing broker shall, as
soon as practical, disclose the existence of such arrangements to
potential cooperating brokers and shall, in response to inquiries from
cooperating brokers, disclose the differential that would result in a
cooperative transaction or in a sale/lease that results through the efforts
of the seller/landlord. If the cooperating broker is a buyer/tenant
representative, the buyer/tenant representative must disclose such
information to their client before the client makes an offer to purchase or
lease. (Amended 1/02)
Presentation of Multiple Offers
Multiple offers present a complex situation and although there is no
single standard approach or procedure. However, NAR does provide
guidelines on how proceed. Basically, there are two ways multiple offers
can be presented.
 Individual presentation
Each contract is presented to the seller and listing agent only; the
contents of each offer are not shared with anyone else.
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 Group presentation
All offers are presented at the same time with all representatives
present. The contents of every offer are made known to the
representatives of all buyers. Since some buyers may not want
their information disclosed to other parties, all buyers should be
notified if this method is to be used by the seller.
If a multiple offer situation arises, counsel buyers not to panic or
withdraw from negotiations; they may be the highest bidders and will
never know it if they pull out. Although the situation may be nerve
wracking and the final outcome disappointing, it is worth the time and
effort to go through at least one round of negotiations before
withdrawing. Counsel buyers to have a price in mind, remain objective,
and stay in the negotiations until that price is reached.
Counter Offers
Be ready to implement your negotiating strategy when the seller makes a
counter offer. Refer back to the scenarios you constructed when
developing an offer and negotiation strategy. Does the counter offer
match of one of the scenarios? Is it close to aligning with your buyerclient’s priorities? Before responding to a counter offer, it’s wise to
reassess objectives. For example:
 Is lowest price still most important?
 Have circumstances changed to alter the closing date?
 At what point and why would the buyer walk away from this
negotiation?
 How important is it to include items such as the ceiling fan, drapes,
and other personal property in the purchase contract?
Identify points of agreement and differences between your buyer-client
and the seller. Focus the negotiations on areas of disagreement and
concentrate on resolving those issues. Although most concessions occur
at the closing phases of negotiations, patience and staying focused on
objectives achieves the best outcome. Prolonged, incremental
negotiating is not without risk. Caution your buyer-clients that the longer
negotiation, the greater the risk that a seller may accept a competing
offer—just to conclude the deal.
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You Make the Call
What would you do in these situations? What are your duties to your buyer-client?
1. You wrote an offer on Friday and the listing agent informs you that offers will not be
presented until Tuesday. Is that okay?
2. The seller rejected your buyer-client’s full-price offer on a listing. The buyer believes that a
full price offer must be accepted and threatens to sue the seller. If the buyers still want the
property, what advice would you give them?
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3. The seller rejects an offer because she refuses to sell her home to an attorney. Can she do
that?
4. A seller refuses to negotiate with your buyer who wants to remain anonymous. Is this a
problem?
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Other issues:
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5. Bringing the Transaction to a
Successful Close
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The buyer and seller have agreed on terms and the signed purchase
contract and the earnest money is sitting in an escrow account. It’s time
to sit back and wait for closing, right? What more is there to do?
The buyer agent's job has not ended when the contract is signed. Your
continued attention to buyer-clients presents another opportunity to
prove your value proposition. The reason you are in this business is to
represent buyers for compensation. Real estate professionals know all
too well that no closing means no compensation. Even with the finish line
in sight, buyers can encounter pitfalls that delay or derail the closing.
Let’s take a look at what the buyer’s representatives can do to help their
clients complete those final steps to the closing finish line.
After the Contract Is Signed
A pre-closing check in with your buyer-clients provides an opportunity to
review what they need to know and do. Use the consumer one-sheet on
page 132 as a handy reference Key items to cover include the following:

Contract contingencies
Review contingencies with the buyer. Establish a timeline for
completing the buyer’s contingencies and monitoring the seller’s
completion. Admonish buyer-clients that the consequences of not
complying with the terms of the contract could be a loss of the
property and earnest money.

Additional information, such as condo docs, must be
requested and delivered according to the contract.

If there is an attorney review contingency, the attorney must
be chosen and the contract delivered in a timely manner.

Mortgage application
Purchase contracts often stipulate a time frame for making a
mortgage application. Even if the contract does not specify a date,
the buyer should not delay initiating an application. When shopping
for a mortgage, inquiries to lenders should be within a short span of
time. Too many checks of credit scores by lenders can work against
the borrower. If all of the checks are similar and within a short time
frame, lenders will consider them as one credit-checking event.

Inspections
Home inspections should be scheduled ASAP. The purchase contract
will likely stipulate a date by which inspections must be completed. If
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5. Bringing the Transaction to a Successful Close
the inspection turns up major problems, it takes time for the seller to
make repairs or renegotiate terms. The buyer should be present at
the home inspection, which usually last 2–3 hours.

No changes in financial picture
Warn buyers not to make any changes in their financial picture
between contract and closing. Lenders recheck credit and
employment shortly before closing and a loan commitment could be
rescinded if there is a change.

Documents
Throughout the application process, the lender may ask the buyer to
supply additional documents or information. Procrastination in
complying with these requests delays mortgage approval.

Schedule the walk-through
It is important for the buyer to do the walk-through personally. The
buyer’s representative should not do this for the buyer-client.
Obtaining a Mortgage
Unless the transaction is an all-cash deal, the buyers need to obtain
mortgage financing.
In truth, the buyer should take first steps for a successful mortgage
approval—well before the loan application—by improving or repairing
credit rating issues and debt load. For example, after a period of credit
difficulties, it may be best to wait 12 months to apply for a mortgage
because barriers usually diminish after a year. Underwriting standards
have tightened considerably in the past few years making lenders more
cautious about mortgage loan approvals. Even high-income buyers can
run into credit reporting problems that delay a mortgage approval.
The consumer one-sheet on page 133 can help you explain the process.
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contract to closing
132
5 steps
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Mortgage Application Follow-Up
As noted above, after completing the initial mortgage application
process, the lender will likely make several requests for additional
documentation and information. A prompt response from the buyer
keeps the process moving along.
You can help your buyer-clients by providing an advance list of
documents that lenders in your area typically request. Your buyer-clients
can begin compiling the information in order to prepare for a mortgage
application. Lender requirements differ, but most require:
 Social security numbers and birth dates
 Photo identification
 Paycheck stubs showing year-to-date earnings
 W-2 or 1099 tax forms for the past two years
 Employer’s name, address, and telephone number (current and for
the last 2 years)
 Account statements for checking, savings and other accounts
 Statement of current assets (IRA accounts, investment accounts,
employee retirement accounts, brokerage accounts)
 Outstanding loan balances and monthly payments along with lender
information, such as auto loans, student loans, and credit cards
 Current and previous addresses over the last two years
 Current mortgage balance and payments or the name and address
of the landlord and monthly rent payment
 Copy of the purchase contract
Additional Documentation for Some Situations
 Veterans Affairs (VA) Loan Applications require a copy of the
borrower’s DD214 Form (discharge papers) or a certificate of
eligibility.
 Active duty military may also need a power of attorney and an alive
and well statement.
 Borrowers who are self-employed or compensated by commission
should provide federal tax forms for the last two years along with a
current year-to-date profit and loss statement. Employment and
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business locations of self-employed borrowers must be
independently verifiable. Tip income must also be verified.
 Borrowers who are separated or divorced must provide a copy of
the divorce decree or separation agreement. Alimony and child
support payments count as income; provide proof of payment for
the past year.
 Social security, pension, disability or any form of public assistance
benefits qualify as income. The borrower must provide a copy of an
award certificate or a copy of a check from the issuing agency.
 If the borrower has experienced a bankruptcy or foreclosure
judgment within the past 7 years, information about the
proceedings must be provided. For bankruptcies, documentation
should include a copy of the bankruptcy discharge, a schedule of
both debts and assets, and an attorney’s letter explaining the
outcome of the proceedings.
 If the source of the down payment is a gift or money borrowed
from relatives, the lender may request documentation.
Data Security Planning
Real estate professionals often collect a lot of personal information about
clients and customers in the course of finding the right home. In this age
of digital recordkeeping, your office policies should include standards and
procedures for collecting, sharing, destroying, and protecting customer
and client information. A data security plan includes protecting the
security, confidentiality, and integrity of data as well as disposing of it
properly when no longer needed. The Federal Trade Commission
recommends five key principles for a sound data security program:
1. Take stock: know what personal information is in office files and
computers and who has access.
2. Scale down: keep only what is needed for business.
3. Pitch it: properly dispose of information that is no longer needed.
4. Lock it: protect the information that is kept.
5. Plan ahead: create a plan to respond to security breaches.
NAR offers a free Data Security and Privacy Toolkit to educate real estate
agents and brokers, associations, and MLSs about data security issues.
The Toolkit provides information about state laws and pending federal
135
regulations as well as guidance and checklists for drafting a security
program tailored to the operations of the company. Download a copy of
the Toolkit at www.REALTOR.org/law-and-ethics/nars-data-security-andprivacy-toolkit.
Property Insurance
Buyers should begin the process of applying for property insurance at the
same time that they apply for a mortgage. Homeowner’s insurance is
required in order for the deal to close.
Get a C.L.U.E.
It may come as a surprise to buyers to learn that the loss claims made by
previous owners are used to calculate premium rates and even to deny
coverage in some instances. The insurers look at the history of the
property; for example, is it in an area susceptible to destructive weather
events? As a contingency, the buyers can request the sellers to provide a
Comprehensive Loss Underwriting Exchange (C.L.U.E.) report on the
property detailing the most recent five-year history of property claims.
The sale can be contingent on a home inspection ensuring that problems
identified in the C.L.U.E. report have been repaired.
Insurers also look at a potential policy holder’s credit score when
deciding whether or not to offer coverage and determining premium
rates. Insurers feel that someone who has a low credit score, indicative of
poor credit management, will be less likely to do needed upkeep.
Flood Insurance
If your property background check found that the property is located in a
mapped flood plain, the homeowner will need to purchase flood
insurance through the federal National Flood Insurance Program (NFIP)
administered by FEMA. For information on coverage, refer the buyer to
the program website at www.fema.gov/national-flood-insuranceprogram. Early application is important because, in most circumstances,
there is an automatic 30-day waiting period for coverage to take effect.
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Title Insurance
Title insurance is a type of coverage that is often misunderstood. Who is
covered for what loss? Imagine this scenario. A few weeks after moving
into a new home, someone knocks on the door. He informs you that the
sale was fraudulent and that he is the rightful owner. Title insurance
protects the policy holder—the lender or borrower—from losses
resulting from defects in the title. Lender title policies protect the lender
and owner title policies protect the homeowner.

Lender’s title policy
The lender’s policy insures the validity and enforceability of the
mortgage document. This guarantee makes it possible to sell the
mortgage in the secondary market. The value of the policy equals the
amount of the mortgage. The lender will probably use a designated
company to write the lender’s title policy.

Owner’s title policy
Title insurance protects the buyer’s ownership right to the home,
both from fraudulent claims and from mistakes (such as an inaccurate
description of the property) made in earlier sales. It’s a one-time cost
based on the price of the property. Title insurance is particularly
important for buyers who purchase homes in foreign countries, for
example Mexico, where property records can be murky or
nonexistent. Title insurance is a good idea even for new construction.
Even though the home is new, the land isn’t. There may be claims on
the land or liens placed during the construction.
The buyers may wish to include provision of an owner’s title policy in the
purchase contract, to be paid by the seller, although this can vary
depending on your state and local customs. Home buyers can—and
should—shop around for the best rates. Title insurance is a very
competitive business and a search on the Internet for owner’s title
insurance brings up numerous hits.
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Final Walk-Through
Most purchase contracts entitle the buyer to a walk-through inspection
of the property 24 hours before closing. It is important that buyer do this
personally. The buyer’s representative can accompany but should not do
the walk-through for the buyer-client.
The purpose of a final walk-through is to:

Check that the condition of the home is in the same condition as
the day the buyer made the offer

Ensure that the seller has vacated the property and left it in the
condition specified in the sales contract

Check that agreed repairs have been performed
In case there are major problems, the buyer can ask to delay the closing
or request that the seller deposit money into an escrow account to cover
the necessary repairs.
Provide your buyer-client with a copy of the consumer one-sheet on the
preceding page as a helpful checklist.
What Derails Closings?
Delayed or derailed closings disappoint everyone—buyers, sellers, and
real estate professionals. The ripple effect upends subsequent
transactions too, such as when a buyer must sell a current home in order
to purchase a new one. What delays closings and how can buyer’s
representatives protect their clients?

Appraised value too low
When properties appraise below the agreed sale price it’s a big
headache for buyers, sellers, and real estate agents. The transaction
comes to a halt until the issues can be resolved. What are the
solutions?

Check the appraisal report for errors like mistakes in square
footage or overlooking a room.

Ask the appraiser to review and revise their report and value
estimate using different comps. Anecdotal evidence from many
139
real estate professionals, however, attests that revisions are rare
unless the error is really glaring.

Ask for a second opinion review appraisal.

Is the appraisal too low or the home is overpriced? Renegotiate
the sales price.

The buyer pays the difference in cash.

Encourage the buyer to include a contingency that states that the
offer is void if the property does not appraise at or above the
sales price, or the buyer and seller must agree to renegotiate.

Missing Documentation
Missing documentation is a chronic problem for closings on distressed
properties, particularly REO properties. Paperwork needed for a
closing can be easily overlooked when asset managers or attorneys
must oversee several hundred properties at the same time. As the
buyer’s representative, you can stay in contact with the listing agent,
title company, and attorneys to check that all of the necessary
paperwork will be available at closing.

Repairs
The home inspection or walk-through can turn up defects in the
property or delayed repairs. A solution is for the sellers to deposit
funds in an escrow account to cover the cost of repairs. Extensive
damage for example from a fire or storm can jeopardize the entire
transaction. Generally, a buyer may prefer to back out of contract and
receive a refund of earnest money if the property is severely
damaged or destroyed. Alternatively, the buyer may choose to go
through with the purchase once the damaged property is restored at
the seller’s expense. Sellers, however, do not have the right to cancel
a contract if the property to which they planned to move is damaged
or destroyed, unless the availability of the new house has been
included as a contract contingency. When such an event occurs the
real estate professional and client need an attorney’s advice before
taking any action.

Property insurance denial or premiums too high
Stress to buyer-clients that they should apply for insurance coverage
without delay after signing a purchase contract. The lender will not
permit the closing to proceed if the buyer is unable to obtain or
afford adequate property insurance or if a higher premium is needed
and the buyer no longer qualifies.
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
Mortgage denial
If there are changes in the borrower’s credit picture between the
mortgage application and closing, such as financing a new car, the
lender may rescind the loan approval. As noted above, counsel clients
not to take any actions that would impact their credit rating. Big
credit-card purchases like appliances and furniture, or new car loans
should wait until after the closing.

Impending weather events
Impending weather events can bring closings to a halt along the Gulf
Coast. Insurers suspend writing new policies when a hurricane enters
a geographic area—the hurricane box—encompassing all Florida and
most of the Gulf of Mexico coastline. Lack of property insurance
delays closings until the storm clears the “box.” When Mother Nature
is in control, real estate closing must wait.
Prepare the Buyer for Closing Day
Preparing the buyer for what will take place at the closing reduces stress
and facilitates a no-problem settlement process. Counsel buyer-clients on
what to expect, how to prepare, and who will attend. Help your buyerclient prepare by providing samples of the HUD-1 settlement form and a
Truth-in-Lending statement. Consider putting the following information
into a checklist format to help your buyer-clients envision the transaction
finish line.
How to Prepare
In the days before closing, buyers should gather all the paperwork
accumulated throughout the buying process as some of the documents
might be needed at closing:
 Identification—photo ID document
 Good-faith estimate
 Purchase contract
 Proof of title search and title insurance
 Proof of homeowners insurance and other insurance certificates
 Home appraisal
 Home inspection reports
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 Certified , cashier’s check or wired funds for the down payment,
closing costs, and any other money paid at closing. Verification of
how the funds need to be transmitted should be done with the title
company or lender.
Who Attends the Closing?
Closing procedures vary from state to state (and even county to county),
but the following parties usually attend the closing.
 The buyer—referred to as the mortgagor
 The seller
 Real estate agents for both the buyer and seller
 Closing agent—usually an employee of the title company
 The lender—referred to as the mortgagee
 Attorneys—for both the buyer and seller.
 Title company representative, to provide written evidence of the
ownership of the property.
What to Expect
On closing day, all parties will sign the papers officially sealing the deal
and ownership of the property will be transferred to the buyer. It's the
last opportunity to make any changes to the transaction. The closing
agent conducts the settlement meeting and makes sure that all
documents are signed and sent for recording and that closing fees and
escrow payments are paid and properly distributed. The buyer-client
should be prepared to:
 Sign legal agreements

Between the buyer and the seller transferring ownership of
the property

Between the buyer (the mortgagor) and the lender (the
mortgagee) agreeing to the terms of the mortgage loan
 Pay for the down payment and closing costs

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Closing costs are paid out of pocket or rolled into the principal
balance of the new mortgage

Shortly before the closing, the buyer should receive an
estimate of how much they will be expected to pay at closing
and instructions on how to make the payment.
 Receive the keys

The buyer receives the keys to the new home according to the
terms of the contract as well as copies of the closing
documents.
 receive and inspect copies of closing documents

HUD-1 settlement statement itemizing all the costs associated
with the closing and money exchanged between the buyer
and seller

Truth-in-Lending statement stating the terms of the mortgage
loan, annual percentage rate, and rescission period

Mortgage and note with the loan terms and repayment
schedule

Property deed transferring ownership to the buyer

Affidavit statements by either party; for example, the sellers
may provide an affidavit stating that the property is free from
liens

Proration agreements showing how costs like property taxes
will be divided between the buyer and seller.

Tax and utility receipts

Abstract of the Title search showing the history of ownership
for the house
After the Closing
In the flurry of closing a transaction and moving to a new
home, important paperwork from the transaction can be
misplaced. Perform a valuable service for your buyerclients by helping them compile a file of the documents
they provided and received at the closing. For another
touch point, put copies of the paperwork in an envelope
marked for January mailing and addressed to buyers. They
will need the paperwork when they file their taxes. This
service may be the distinction that makes the buyers think
of you when they think “real estate.”
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6. Winning Repeat Business and Referrals
145
So far, we’ve looked at five skill sets that buyer’s representatives need to
succeed and grow their businesses.
 Winning the buyer as a client
 Putting the buyer representation agreement into action to find the
right house at the right price and terms
 Handling offers, counter offers, and negotiations
 Bringing the transaction to a successful close
The remaining skill set we’ll look at is the key to growing your business:
 Winning repeat business and referrals
The challenge of this skill set is finding the best methods for staying topof-mind and making your name and company synonymous with real
estate.
Would Buyers Work With You Again?
Have you ever browsed through a list or shelf of business books—online
or in a bookstore—about customer service? There are hundreds of
business books on the topic and new titles appear every month. All of
these business books agree on a basic customer service principle: it costs
most—in time, effort, and resources—to win a new client than to keep a
current one. With this basic tenet in mind, can you answer these
questions?
 When your past clients are ready to make another real estate deal,
do they contact you or your competition?
 When friends and relatives of your past clients ask for the name of a
real estate professional, do they mention you or one of your
competitors?
Let’s take a look back at some of the NAR Research survey results
presented earlier in this course.
 Past clients rank you high on the skills and qualities that matter
most (see page 19), like honesty, knowledge of the process and
market, responsiveness, communications and people skills,
negotiation know-how, and local area knowledge.
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 More than half of buyers find the real estate professional they work
with through a personal connection—a family member or friend, a
previous transaction, or referral from another real estate agent.
(see page 18).
 Almost 9 out of 10 (88 percent) buyer-clients were very satisfied
working with you. They would work with you again and—very
important—recommend you to others.
 Only about 12 percent of buyers work with an agent they previously
used.
If these national statistics are characteristic of your local market, 9 out of
10 of your past clients say they would work with you again, but only 1 in
10 does? Why the big gap? Could the difference be in the follow-up?
Do they move away?
Sometime buyers use a different real
estate agent because they move away—to
other cities or states. But nationwide, half
of household moves involve distances of
15 miles or less. NAR research shows that
the regional median distances for
household moves are:




Northeast: 10 miles
Midwest: 10 miles
South: 15 miles
West: 15 miles
Do you expect to be in business 5 years from now?
It’s true that as homeowners age, they change homes less frequently. But
consider that about 1 in 5 buyers aged 18–24 expect to move to a
different home within 5 years. The halfway mark for household moves by
buyers aged 25–44 is 10 years; almost one-third (32%) plan to move to a
different home within 7 years or less. The years between ages 18–44 are
the most active home buying and selling time of life.
Source: 2013 Profile of Home Buyers and Sellers, National Association of REALTORS®,
www.Realtor.org/Research
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Sharpen Your Skills
Be ready to provide the skills that buyers want and value most—right
property, right terms, negotiation, and transaction guidance.
You’ll need to complete an elective course to earn the ABR® designation.
Make course enrollment an opportunity to sharpen your skills. See page 5
for the list of elective courses. For information on course dates and
locations, including online courses, go to www.training4RE.com
Do Your Homework
The key to keeping the clients you worked so hard to acquire is
knowledge. If asked, a real estate professional could likely provide a
description of the typical client based on perception and experience. But,
have you ever taken time to categorize and analyze your clients,
customers, and prospects based on their objectives, lifestyles, life stages,
interests, and property types?
This analysis step need not be time consuming, scientific—your
observations are valid and valuable—or exhaustive. It can be as simple as
articulating answers to the following questions:
 Demographics: Age range, gender, family composition
 Home choice: What kind of home did they sell and what kind of
home did they buy? What were the price ranges?
148
 Are they local, from out of town, or out of state?
 Who are their employers?
 How did they find me?
What other analysis points would you add to this list? What does the
completed analysis tell you about where and how to invest your time,
efforts and resources?
Study Your Competition
Can you quantify your market share? Take a look at your productivity in
comparison to your competition. What services do they offer? Ask
yourself: compared to my competitors, am I promoting the services
buyers want and value?
Am I offering a solution for buyer-clients?
Study the Market
Use your core farming skills to define your market area and learn every
inch of it. You could start by drawing a circle around your target market
on a detailed map of the area; experienced practitioners advise that
about 300–400 properties is a manageable number. Drive and walk the
area and get to know everything about it—all of the streets, alleys,
properties, advantages, and quirks. The target area could be one large
resort complex—learn the properties, the units, and floor plans. Get
acquainted with the building managers and service personnel at
developments because they are often the first to know when owners’
circumstances change and they are looking for a buyer.
Study Your Product
If you are a listing agent, your listings are your inventory. But, as a buyer’s
representative, your “inventory” consists of your services—your value
proposition.
When you are in a service business, there are three basic ways to
compete and distinguish yourself in the marketplace. You can base your
value proposition and compete on:
149
 Time
 Cost
 Quality
Consider that if you offer generic service, you probably need to compete
on price or time.
An effective value proposition has a couple of points in common with
competitors and a couple in contrast. For example:
“Every real estate agent can find you a house; we help you find a
home and we’re with you every step of the way ‘til moving day
with our free moving van rental.”
How does this statement compare and contrast with competitors?
Evaluate your promotional communications
? Ego-driven or customer-driven?
? Reflection of your personality or indistinguishable from others?
? Strong emotional appeal or a résumé?
? Targeted to a market niche or general?
? Focused on benefits and solutions for buyers or all about you?
? Professional and appropriate for the audience or junk mail or spam?
Adapted from REALTOR® Magazine Online, Getting the Word Out, www.realtor.org/toolkits
150
151
Ask for Feedback
Whether the request is in print or online, asking a buyer-client for
feedback serves several purposes:
 Tells you what your buyer-clients are actually thinking.
 Informs you if the services you provide are the ones that buyers
need and value and helps you make adjustments to create a better
buying experience for future clients.
 Reinforces the relationship because people value the efforts of a
firm or individual who asks for their opinion.
The request for feedback presents an opportunity to gather testimonials.
Including actual case studies or testimonials in marketing
communications bolsters and proves your value proposition. When
clients recognize their contributions in your marketing materials they
become invested in your success.
Don’t forget to monitor what folks are saying about you online. You can
use an application like Google Alerts to notify you when your name pops
up on feedback sites like Yelp! or Angie’s List.
Should you address negative feedback online? Many marketing experts
say yes. Contact the comment poster and try to resolve the issue.
Sometimes just talking it over—paying attention and apologizing—
handles a complaint. If the issue is resolved, ask the poster to say so
online or withdraw the negative comments.
Ask for the Business—Again
Stay in front of past clients and prospects with mailings, newsletters, and
information of value to the reader. For example,
 Calendar of community events
 Schedule for a local sports team’s games
 Reminders to change batteries in smoke detectors
 Information on remodeling projects that enhance resale value
While you are communicating, remind buyers that you are in the real
estate business and ask for their future business. Make it easy for past
152
clients to refer friends and family to you by listing all the methods for
making contact including your website and fax number. Remember those
renters who you helped or the prospects that weren’t ready to buy?
Maybe they are ready to buy now.
Maintain High Visibility
 Support client’s charitable and community activities
 Partner with local businesses to sponsor community events
 Sponsor raffle prizes for charity and fundraiser events
 Create targeted e-newsletters for market niches
 Blog about community news and invite others in your network to
contribute. Send a URL link or RSS feed to clients, customers,
prospects, and local business owners
 Post community photos on your website or Facebook page
 In seasonal resort areas, offer a webcam view of current conditions
 Hold an annual event focused on client-appreciation, with no sales
pitches
 Volunteer for activities not related to real estate
 Perform an act of goodwill immediately following a community
crisis event
 Donate to a charity on a client’s behalf in lieu of a closing gift
 Sponsor local market research and share the results with your
network and community groups
.
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6-Minute Brainstorm
Considering the lifestyles and stages of these buyers, how would you stay in touch and top-ofmind? What information would be valuable to them?
Darrell and Melissa
Jim and Amy

Examples: Provide information about
community events and services.


Patronize the businesses where they
work.
Examples: Provide information on
remodeling projects that add to resale
value.

Connect Jim’s mother with senior services
and events.
Robert and Patricia
Christina

Examples: Offer an annual no-cost CMA.


Invite them to a client-appreciation event
and invite them to bring a guest.
Examples: Keep in touch through your
blog.

Add her parents to your newsletter list.
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To Blog or Not to Blog?
One of the biggest challenges in starting a blog is deciding what to write about. You could start
with the questions your clients ask most frequently. Chances are, if one client is asking the
question, others are wondering about it as well. Consider posting FAQ features every week. Or,
transform your e-mail newsletter content, postcard tips, and other traditional push-marketing
tactics into blog posts. You could also invite other professionals in your community to be guest
bloggers. Or, do an interview and offer a guest perspective for the post.
Don’t have time to author a blog? Advertise on other popular blogs.
What Should I Blog About?
 Industry trends
 Community events
 Market news
 Tips for first-time home
buyers
 Tips for working with
service providers
 Foreclosure issues
 Common mistakes home
buyers make
 Restaurant reviews
 Guest bloggers
 Home warranty overview
 Favorite seasonal activities
 Title insurance primer
 Local business profiles
 Client testimonials
 Photographs or videos of
neighborhood
 Community service
involvement
 What to look for during a
showing
 Lessons learned from
working with different
buyers
 Home-product reviews
 Blog roundup (read other
community-specific blogs
and publish the “best of the
week”)
 Buying REO properties
 Fix and flip, or fix and hold
 Remodeling projects that
add value
 How to obtain a mortgage
 Local legislation
 Buying a FSBO
 Takeaways from national
conventions
 Links to resources and other
blogs
 Personal stories and
anecdotes
 Commentary on local news
stories related to real estate
 Local point of sale
regulations and required
inspections
155
?
156
Discussion Question
How do you use social media and technologies like smart phones
or tablets in your communications and marketing? What apps do
you use to monitor your online reputation?
Code of Ethics
Carefully monitor all online content, including blog posts and comments,
to ensure alignment with the NAR Code of Ethics and your company
policy. Always maintain professionalism and compliance with legal
requirements such as discussions of commission and privacy laws. This is
critical to your credibility and your ability to generate potential buyers.
The duties imposed by the Code of Ethics encompass all real estaterelated activities and transactions whether conducted in person,
electronically, or through any other means.
The obligation to refrain from making false or misleading statements
about other real estate professionals, their businesses, and their business
practices includes the duty to publish a clarification about or to remove
statements made by others on electronic media the REALTOR® controls
once the REALTOR® knows the statement is false or misleading.
(Amended 1/12)
Your Referral Network
A well-developed network for agent-to-agent referrals can add
considerably to your bottom-line profitability. For a receiving agent, it is
found business without the expense of prospecting. For the referring
agent, it is referral fee income for less work as well as continuation of a
relationship.
Real estate professionals who have robust referral networks can attest
that networking for referrals cannot be left to chance. They affirm that
the keys to success are:
 A long-term time frame: It takes effort over a long time to develop a
successful referral practice and evaluate its success.
 Relationship building: Focus on building and nurturing relationships
before individual transactions.
157
 Ask for referrals: Make sure other agents know that you are willing to
receive and make referrals—a simple step often overlooked.
Network with Local Business Owners
Exam Question 50
Business owners want to know about real estate market trends that
impact their businesses too, particularly in locations dependent on
seasonal traffic. Plus, business owners who serve the same niche market
that you do are a source of referrals. For example, if your interest is in
mountain biking, stay in touch with the local businesses that sell and
repair bikes. Provide links on your website to local businesses that serve
your niche. Pay a personal visit to the business owner and offer to
provide a monthly or quarterly market update. Access to RPR® reports
makes this a snap. Very important—be sure you patronize your clients’
businesses.
Find a Buyer’s
Representative
Referral Network
REBAC maintains a public
online database of its
members. Through this
searchable database,
consumers and other
agents can find a buyer’s
representative in a specific
city, county, zip code, or
neighborhood, or search by
agent name. Consumers
and agents can search
internationally too. REBAC
members who have earned
the ABR® designation come
up first in search results.
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REBAC Supports Your Marketing
Membership in REBAC gives you access to customizable materials you can
use to promote your buyer representation business.
Home Buyer’s Toolkit
More than 50 consumers contact REBAC
every day to request a copy of the Home
Buyer’s Toolkit. This information-packed
guide, including worksheets and checklists,
leads buyers step-by-step through home
buying process—from just looking to
moving day. REBAC members can purchase
the guides in bulk, customized with their
contact information. It’s a perfect giveaway for presentations packets and
consumer events.
Go to the REBAC website—For Members—
to download a sample and place an order.
Guide to Successful Home Buyer’s Seminars
Tap into this online step-by-step guide for planning and presenting a
home buyer’s seminar.
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Postcards and Ad Slicks
160
REBAC Print Shop
The online Print Shop offers professional printing and mailing services at
affordable prices, even for small jobs.
Choose from among 15 themed standard or jumbo postcards and
coordinating ad slicks. Add your
customization and place your order.
Mailing services streamline the
process even more. Upload your
contact lists and the REBAC Print
Shop does the rest—your customized
promotional mailed direct to your
contact list.
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Next Steps—REBAC Candidacy
Congratulations on completing the first step to achieving the Accredited
Buyer Representative designation. Before leaving the classroom, take a
few minutes to plan how you will complete the remaining requirements
to achieve the designation. You have up to three years to complete the
education and experiential designation requirements but the sooner you
achieve the designation the sooner you can put its power to work for
you.
Complete an Elective Course
Refer to the list of elective courses on page 5.
Document Completed Transactions
Document five completed transactions in which you acted as a buyer’s
representative. Any transactions closed before completing this course
can count toward earning the designation.
Maintain REBAC and NAR Membership
By completing this course, you receive a one-year membership in the
Real Estate BUYER’S AGENT Council. Maintain membership in REBAC and
NAR to earn and keep the ABR designation and continue to take
advantage of REBAC member benefits.
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Resources
Prospect ID Form ..................................................................................................................... 164
Sample Agency Disclosure and Brokerage Fee Agreement for Unlisted Property ...................... 165
Buyer Needs Assessment Worksheet ....................................................................................... 166
Buyer Information and Disclosure Checklist ............................................................................. 168
Tenant Information and Disclosure Checklist ........................................................................... 169
True Cost of Homeownership .................................................................................................. 170
REO Transactions: Protecting the Buyer-Client ......................................................................... 172
Make These Scripts Your Own ................................................................................................. 173
163
Prospect ID Form
Place Your Logo Here
Branch address
This form is designed for your safety and security, along with that of property owners and our
agents. We appreciate your consideration and cooperation. All security information is
confidential and will not be sold or used for solicitation purposes. The information may be
subject to verification. Completed forms are kept in the branch office.
Agent’s name: ______________________________
Date: __________
Prospect Information
Your Name(s): _______________________
___________________________________
Home Address: _______________________________________________________________
____________________________________________________________________________
Phone #: Home: ______________________
Work: _____________________________
If from out of town, local contact phone#: ________________________________________
Local Address: _______________________________________________________________
____________________________________________________________________________
I (we) can be contacted at this location until: ______________________________________
Employer: __________________________________________________________________
City, State: __________________________
Employer’s phone #: __________________
Auto
Make and model: ___________________________
Color: ______________________
Owner: ____________________________________________________________________
License #: _________________________________
State: ______________________
Photocopy Driver’s License(s) or other Photo ID(s) and attach to this form.
164
Resources
Sample Agency Disclosure and Brokerage Fee Agreement
for Unlisted Property
Seller acknowledges that _____________________________________________Buyer Broker) has been retained
by Buyer to represent Buyer and has designated one of its sales agents as Buyer’s Designated Agent (Buyer’s
Agent). Seller understands that Buyer’s Agent is the agent of the Buyer with a duty to represent the Buyer’s
interests. Seller further understands that the Buyer Agent is NOT the Seller’s agent and that any information given
to the Buyer’s Agent by the Seller will be disclosed to the Buyer if it is in the Buyer’s best interests.
If this showing results in an offer to purchase by Buyer, the seller agrees to pay the Buyer’s Broker on behalf of the
Buyer ______% of the sale price. Seller acknowledges that the payment constitutes an economic adjustment in the
transaction and does not create any agency relationship between the Seller and the Buyer’s Broker or Buyer’s
Agent.
Seller shall complete all disclosure reports required by law, including but not limited to the Residential Real
Property Disclosure Report and the Lead-Based Paint Disclosure and authorizes Buyer Agent to make all disclosures
available to the Buyer.
Dated: _____________________________________
___________________________________________
Seller
___________________________________________
Broker
___________________________________________
Seller
___________________________________________
Designated Agent
___________________________________________
Property Address
___________________________________________
Company Name
___________________________________________
City, State, Zip
___________________________________________
Company Address
___________________________________________
City, State, Zip
Phone: _____________________________________
Phone: _____________________________________
Fax: _______________________________________
Fax: ________________________________________
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Buyer Needs Assessment Worksheet
Name(s)
Current Address:
Phone Numbers:
Home: ______________________
Home: ______________________
Work: ______________________
Work: ______________________
Mobile: ______________________
Mobile: _____________________
Fax Numbers:
E-Mail:
Preferred contact
method(s):
 Phone: __________________________________________________
 Mobile __________________________________________________
 E-mail: ___________________________________________________
Family size: ________________________ Pets: __________________________________
Currently:
 Own
 Rent
 Must sell to purchase?
Desired possession date __________________________________________________
Mortgage:
 Prequalified
 Pre-approved
Lender: _______________________________________________________________
Ideal Price:___________________________ Ideal Monthly Payment: ____________________
Ideal Location: _________________________________________________________
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Resources
# of Bedrooms: _________
Minimum: _____________
# of Bathrooms: _________
Minimum: ______________
Lot size: _____________________________________
Garage: ______________ How many vehicles? _______
Parking Space:
 Boat
 Camper
Age of home: ___________
 Eat-in kitchen
 Separate dining room
 Family room
 Fireplace
 Workshop
 Home office
 Bus/truck
 __________
Style: ___________
 Finished basement
 Fenced yard
 Deck/patio
 Pool
 Waterfront

Special requirements
 Day care facilities
 Elder care
 Cultural activities
 School requirements
 Sports/recreation
 Home business
 Public transportation

The ideal home: _______________________________________________________
____________________________________________________________________
How long have you been looking for a home?
________________________________
How have you been looking?
________________________________
Did you see anything you liked?
________________________________
What kept you from buying it?
________________________________
Have any agents shown you homes?
________________________________
What was your relationship with the agent?
________________________________
What did you sign with the agent?
________________________________
If we cannot find everything in the price range and location you want, what would you consider
compromising on? ______________________________________________________
____________________________________________________________________
Are some features “deal breakers” that you won’t compromise on? _________________
____________________________________________________________________
Is there anything else I should know about your requirements? _____________________
____________________________________________________________________
167
Buyer Information and Disclosure Checklist

Agency disclosures made
(Disclosure if agent interest, if applicable)
 Agency disclosure form signed
 Dual Agency – form signed
 Discussed Compensation
 __________________________________________________________

Disclosure of stigmatized properties
 _____________________________________________________
 _____________________________________________________

Property disclosures given














Seller disclosure
Mold disclosure
Radon disclosure
Other _____________________________________________________
Recommended buyer obtain insurance during mortgage contingency
Recommended attorney – list given
Recommended home inspection – list given
Recommended home warranty
Possible tax issues: increase, senior exemption, non-owner occupied, new
Sex offender registration information given: website, police department
Googled address of property prior to contract
No change to credit between contract and closing
Confidentiality of offer not guaranteed
Other: _____________________________________________________________________
__________________________________________________________________________
________________________________
Buyer
________________________________
Buyer
Compliments of Madison Seminars
168
_____________________________________________
Agent
_____________________________________________
Date
Resources
Tenant Information and Disclosure Checklist

Agency disclosures made
 Agency form signed
 Dual agency form signed
 Compensation discussed

Disclosure of stigmatized properties

_______________________________________________

_______________________________________________

_______________________________________________

Sex Offender Registration Information provided

Recommend tenant inspections
 Mold
 Radon

Recommend tenant verify lessor position
 Obtain last mortgage statement
 Verify taxes are current
 Verify homeowners association fees are paid

_______________________________________________

_______________________________________________
_________________________________
___________________________________
Tenant
Agent
_________________________________
___________________________________
Tenant
Date
Compliments of Madison Seminars
169
True Cost of Homeownership
One-Time Expenses
Appliances
Furniture
Remodeling.
Will the appliances in the
home need upgrading—now
or in the near future. Don’t
forget to check out the water
heater and HVAC.
If you move from a onebedroom apartment to a
three-bedroom house, you
will probably need more
furniture to fill it. Evaluate
furniture needs and costs for
your new home.
Before purchasing a home
that needs remodeling, ask a
contractor give you an
estimate. Homeowners often
underestimate the costs.
Ongoing Expenses
Principal, interest, taxes, and insurance (PITI)
If you have a fixed rate mortgage, the payment will remain the same for the life of the loan.
Taxes and insurance may increase.
Homeowner Association Fees
Fees or assessments for a condo, townhouse or single-family home with an association can
increase yearly. Compare fees of similar properties line-by-line. Check what the fee includes; for
example, utilities gas, electricity, garbage pickup, and water. Watch out for special assessments
for capital repairs and improvements to common areas.
Exterior maintenance
Replacing the roof, painting the siding or trim, sealing the driveway, sealing the deck and
repairs, replacing windows, gutter cleaning or repair, septic and well maintenance are just
some of the additional exterior maintenance costs in owning a home. Some maintenance jobs
you can do yourself, but other jobs require professionals. Don’t forget the tools that go along
with these maintenance jobs: lawn mowers and trimmers, power washers, compressors, heavyduty ladders, and power tools.
Interior maintenance
If you've been renting, your landlord probably picked up the tab for repairs and general
maintenance. Once you own your home you'll be footing the bill. You will need to maintain
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Resources
appliances, plumbing and electrical systems, carpets, floor and wall coverings, and so on.
Utilities
If you are renting you're probably used to budgeting for utilities. But the cost of heating a onebedroom apartment can pale in comparison with the bills for an entire house. A real estate
professional can help you find out about the current occupant’s costs but family size and usage
impacts those numbers.
Yard care and snow removal
Plan on buying a lawnmower and other landscaping tools or budget for a professional lawn
service. Include a snow shovel or snow blower if you live in a cold climate.
Pest control
Depending on location, be sure to schedule a termite inspection before you purchase a home.
Purchasing a termite infestation bond may be in order. Even if there is no infestation at the
time of the inspection, that's no guarantee these or other pests won't show up.
Transportation Costs
Don't forget to calculate transportation costs whether by public transportation or your own
vehicle. Budget for gas, oil, insurance, tires, and regular maintenance. Will you need to
purchase another car to take care of all of the family’s transportation needs?
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REO Transactions: Protecting the Buyer-Client
 Prepare and submit a complete offer
 Confirm the buyer’s proof of funds.
 Review offer documents to make sure
all fields are filled in.
 Research the property condition and
history
 Look for outstanding violations, code
issues, liens, or back taxes.
 Obtain up-to-date utility bills.
 Recommend consulting an attorney for
an estoppel on unpaid homeowner
association fees.
 Document property condition
 Take date-stamped photos inside and
outside.
 Pay special attention to areas in need
of repair.
 Set a feasible closing date
 Don’t fill in an automatic 30-day
closing if you’re not sure it can
happen.
 Allow time to complete all of the
point-of-sale inspections and obtain
repair estimates, loan approval, and
condo approval.
 Keep on top of transaction deadlines
 Schedule inspections per the terms of
the purchase agreement.
 Follow up with the title company and
lender to ensure paid liens and a clear
title.
 Meet deadlines—a missed deadline
can cancel the deal.
 Guide the buyer to financing sources and
assist with repair estimates
 Provide contacts for 203(k) lenders.
 Inform the buyer of grants and
incentives.
 Suggest contacts for preparing
required repair estimates.
172
 Confirm the feasibility of the buyer’s
plans for the property
 Check owner/renter ratio of condo
developments for rental restrictions.
 Confirm that the property is zoned for
the buyer’s intended use.
 Inform buyers of criteria for 203(k)
rehab financing.
 Encourage the buyer to assess liabilities
and insurance coverage
 Home warranty
 Title insurance—protection against
defects like unreported liens
 Builders risk policy—for unoccupied
properties
 Stay in touch with the listing agent
 Monitor the status of offers.
 Advise progress and warn of delays.
 Schedule a final walk through
 Report damages or changes in
property condition to the listing
agent.
 Help the buyer negotiate a credit or
price reduction for damages occurring
between contract and closing.
 Use date-stamped photos as evidence
of before/after condition.
Resources
Make These Scripts Your Own
The following questions asked by buyers probably sound familiar to you. Ready answers to
buyers’ frequent questions enhance your presentations by demonstrating your experience and
professionalism. Knowing you’ll never be at a loss for words, builds your confidence.
 If I sign an agreement, am I locked in? Is this an open-ended commitment?
A. In my company, most buyer representation agreements last for 2–3 weeks with the
option to renew. Of course, if you are dissatisfied with the arrangement, you always have
the choice to cancel the agreement. Keep in mind, however, that in this marketplace,
buyers typically take 10–12 weeks to find a home.
 I’m interested in new homes and the developers all say I can work directly with them.
A. You certainly can, but if you ever needed an agent on your side it is when you are
buying from a “professional seller” such as a builder. My job is to point out the pros and
cons of what the builder is offering, such as: is the premium they charge for the corner
lot likely to pay off when you sell? I can help you buy smart and potentially save you
thousands in the long run.
 I can find properties on the Internet. I just need you to get me in the door.
A. What you find on the Internet are advertised properties—not necessarily all the
properties available. I have access to the MLS with real-time information on the latest
listings including new on the market and price changes. I also have relationships with
agents in other offices who may have listings that are not even advertised. Even in a
buyer’s market there are homes selling daily that you might never see if you wait for them
to show up on the Internet; they’re selling before they even get there.
 I would like you to work for me, but I don’t want to sign anything. A handshake is
enough and I can trust you, right?
A. You certainly can trust me and I feel that I can trust you as well. That said, I can only
work with (3, 4, 5) buyers at a time if I am going to give them the service I am committed
to giving and they are entitled to. I only work with buyers with whom I have a contract,
which protects their interests. Let me explain how.
 If your commission is based on the sale price, how can I be sure you will try to get me
the best deal?
A. Because I am your agent, I must put your interests ahead of everyone else’s. I would
never violate my duties to you or jeopardize my commission for the small portion earned
off the “negotiating room” on your $200,000 purchase.
 I don’t want to pay a fee to an agent. The seller pays your commission, right?
A. You do not “pay” me out of your pocket; my fee is a part of the exchange of monies at
closing. Although the commission is taken from the seller’s sale proceeds, when you think
about, you are paying the commission in the amount you offer and the mortgage you are
taking out on the property. You put the money on the table at closing.
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 If sellers can go FSBO why can’t I make a purchase on my own?
A. My job is to protect your interests and help you acquire all the information you need to
make an educated decision. Once we’ve determined the value of a piece of property, I will
help you negotiate the best price and terms. After that, I’ll keep an eye on the transaction
details through the closing and until you move in.
 The sales agents who show me property are really nice, why do I need a buyer’s rep?
A. Most of those agents are listing agents. Being nice is their job but they are looking out
for the best interests of the seller, not yours. You want someone working for you and
helping you get the best price on the right house.
 I don’t like to make a commitment to just one agent. I like to keep my options open.
A. You are more than welcome to work with more than one agent at a time. Each of us
has access to the same inventory of property on the MLS. But with all of us calling you to
look at the same houses you could waste a lot of time. Bottom line, you’ll get much better
service from one agent who is committed and loyal than from many of us. I owe it to the
buyers I am working with now not to take time away from them for buyers who are
working with many agents at the same time.
 I want to find a really good deal! What can you do for me?
A. My knowledge of the market and ability to research available properties will give you
ample choices of properties that are potential good deals including distressed properties. I
can give you the advice you need to make an offer and negotiate a favorable combination
of price and terms.
 Is your commission negotiable?
A. This is the fee that the company has determined is fair for the services we provide. And
remember, no fee is earned until we have a completed transaction. My compensation is
paid at the closing.
 Do I have to pay a fee if I don’t buy anything?
A. With our company you do not. But, if you are serious about looking for a home and
need to purchase, what would stop you from buying?
 What if I don’t like working with you? How do I get out of this?
A.. If at any time you are unhappy with my services, you can speak with my broker. She
will resolve the issues by assigning a different agent or cancelling your agreement.
 The market is kind of confusing right now. How will you help me decide how much to
offer?
A. I will do a comparative market analysis before you make an offer on a property so that
you will know facts like: fair market value, number and prices of similar homes for sale,
time on the market, and any information about the seller and the property condition that
is available. All of that information will help us formulate an offer.
174
Resources
 I heard that dual agency is not good for a buyer.
A. That depends on the buyer. If you are new to the area or have never owned a home, I
might agree with that. You, however, have lived here all your life and have a good feel for
the market. A dual agent will always give you all information about the property but
cannot give you confidential information about the seller or recommend an offer price. If
we do find one of my listings you want to buy, I will do a CMA so you can decide what
price to offer.
 If every agent has access to the MLS, what is the advantage of working with you?
A. Helping you buy a home is more than just finding one. My expertise includes
negotiating, following up from contract to closing and working with the attorneys, title
companies and other agents in the marketplace. You want to work with someone who
understands what it means to “play well with others” but always puts your interests first.
That’s my specialty.
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Ask Your Broker
Make a note of important questions, issues, and clarifications to discuss with your broker or
office manager.
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176

Accredited Buyer`s Representative Designation Core Course

Transcription

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